The dollar turned up against major currencies on Friday as US Federal Reserve Chairman Ben Bernanke said he would “act as necessary” to control inflation at an economics conference and as oil retreated again. The British pound dropped to a 25-month low.
The euro fell to US$1.4775 in late New York trading from US$1.4877 late on Thursday.
At the economic symposium in Jackson, Wyoming, Bernanke said the “financial storm” in the US “has not yet subsided and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment.”
He also said the inflation outlook is uncertain but will probably moderate later this year.
While the Fed can try to contain inflation by raising interest rates — which could also support the buck by making US investments more attractive — growing unemployment and concerns about economic growth may stop it from doing so.
Lower interest rates can undermine a currency as investors transfer their funds to assets with better returns.
“The dollar has taken back some of its losses. We’ve got information that indicates: ‘Look, no matter how bad things are going in the US, things look worse elsewhere,’” said David Watt, senior currency strategist at RBC Capital Markets in Toronto.
The British pound, meanwhile, erased Thursday’s gains, dropping to US$1.8519 from US$1.8751. Earlier in the day, the pound had fallen as far as US$1.8503, its lowest point since July 2006.
On Friday, the British government said economic growth in the UK was flat in the second quarter, the first time the economy didn’t grow for almost 16 years. Economists said contraction in the third quarter is likely, meaning that Britain could be in a recession.
The Bank of England and the European Central Bank early this month left their interest rates unchanged at 5 percent and 4.25, respectively. The Fed cut its rates seven times from September to June. Its next meeting is on Sept. 16 and many economists believe the rate will remain steady.
The dollar also rose to ¥110.03 from ¥108.65 on Thursday.
FREEDOM OF NAVIGATION: The UK would continue to reinforce ties with Taiwan ‘in a wide range of areas’ as a part of a ‘strong unofficial relationship,’ a paper said The UK plans to conduct more freedom of navigation operations in the Taiwan Strait and the South China Sea, British Secretary of State for Foreign, Commonwealth and Development Affairs David Lammy told the British House of Commons on Tuesday. British Member of Parliament Desmond Swayne said that the Royal Navy’s HMS Spey had passed through the Taiwan Strait “in pursuit of vital international freedom of navigation in the South China Sea.” Swayne asked Lammy whether he agreed that it was “proper and lawful” to do so, and if the UK would continue to carry out similar operations. Lammy replied “yes” to both questions. The
Two US House of Representatives committees yesterday condemned China’s attempt to orchestrate a crash involving Vice President Hsiao Bi-khim’s (蕭美琴) car when she visited the Czech Republic last year as vice president-elect. Czech local media in March last year reported that a Chinese diplomat had run a red light while following Hsiao’s car from the airport, and Czech intelligence last week told local media that Chinese diplomats and agents had also planned to stage a demonstrative car collision. Hsiao on Saturday shared a Reuters news report on the incident through her account on social media platform X and wrote: “I
SHIFT PRIORITIES: The US should first help Taiwan respond to actions China is already taking, instead of focusing too heavily on deterring a large-scale invasion, an expert said US Air Force leaders on Thursday voiced concerns about the Chinese People’s Liberation Army’s (PLA) missile capabilities and its development of a “kill web,” and said that the US Department of Defense’s budget request for next year prioritizes bolstering defenses in the Indo-Pacific region due to the increasing threat posed by China. US experts said that a full-scale Chinese invasion of Taiwan is risky and unlikely, with Beijing more likely to pursue coercive tactics such as political warfare or blockades to achieve its goals. Senior air force and US Space Force leaders, including US Secretary of the Air Force Troy Meink and
‘BUILDING PARTNERSHIPS’: The US military’s aim is to continue to make any potential Chinese invasion more difficult than it already is, US General Ronald Clark said The likelihood of China invading Taiwan without contest is “very, very small” because the Taiwan Strait is under constant surveillance by multiple countries, a US general has said. General Ronald Clark, commanding officer of US Army Pacific (USARPAC), the US Army’s largest service component command, made the remarks during a dialogue hosted on Friday by Washington-based think tank the Center for Strategic and International Studies. Asked by the event host what the Chinese military has learned from its US counterpart over the years, Clark said that the first lesson is that the skill and will of US service members are “unmatched.” The second
RSS