The US dollar posted its biggest weekly loss since November against the currencies of major US trading partners as an unexpected drop in jobs boosted speculation that the Federal Reserve may extend stimulus measures.
Sterling was the only major currency to fall against the dollar this week as British Prime Minister Gordon Brown clashed with the Conservative opposition on the UK’s budget deficit. The greenback slid from a four-month high against the yen on the prospects for the world’s largest economy. A report next week is forecast to show US retail sales grew at a slower pace.
The trade-weighted Dollar Index, which the ICE futures exchange uses to track the greenback against currencies including the euro, yen and pound, decreased 0.5 percent to 77.471 on Friday, from 77.860 on Jan. 1. It touched 78.449 on Dec. 22, the highest level since September.
The US dollar slid 0.4 percent to ¥92.66 this week, the greenback’s first five-day drop since Dec. 11. The dollar fell 0.6 to US$1.4409 per euro, from US$1.4324. The euro gained 0.2 percent to ¥133.46, from ¥133.20.
The pound dropped for a seventh week in eight against the US dollar.
Sterling also depreciated versus the euro after a cross-party committee of lawmakers that scrutinizes Treasury policy published a report saying budget plans announced last month lack enough clarity to ensure credibility with markets. Chancellor of the Exchequer Alistair Darling said last month he planned to boost borrowing to revive the economy. The Bank of England this week kept its key interest rate at 0.5 percent and its asset-purchase program target at £200 billion (US$318 billion).
“The fiscal position in the UK is leading to a negative sentiment for the pound,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “And foreign investors are never happy to invest where there is political uncertainty.”
The pound fell 1 percent to US$1.5986 as of 4:45pm in London on Friday. It weakened 1.3 percent to £0.8976 per euro.
ASIAN CURRENCIES
Asian currencies rose this week, led by the South Korean won and Indian rupee, as the outlook for economic growth and interest-rate increases this year attracted overseas funds to the region’s assets.
The Bloomberg-JPMorgan Asia Dollar Index started the new year with its best weekly performance since May, as reports in Indonesia and Taiwan showed exports are rebounding.
The won climbed 2.9 percent to 1,130.75 per US dollar at the 3pm close in Seoul from a week ago, the biggest gain in eight months, according to data compiled by Bloomberg.
The rupee rose 1.8 percent to 45.7652 and the rupiah appreciated 1.9 percent to 9,215.
The baht traded near a three-week high after Finance Minister Korn Chatikavanij said on Thursday the government would spend as much as 5 percent of GDP this year to boost an economic recovery. The baht rose 0.6 percent this week to 33.16 per US dollar in Bangkok.
The New Taiwan dollar rose 0.5 percent to NT$31.88 this week.
Elsewhere, the Philippine peso climbed 0.9 percent to 45.81 and Malaysia’s ringgit climbed 0.8 percent to 3.3775 this week.
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