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| Dollar, yen profit from investor risk aversion |
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Time is GMT + 8 hours
Posted: 2-Dec-2008 07:02 hrs |
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| Euros and US dollar banknotes in a cash register. The dollar and particularly the yen strengthened on Monday as investors sought safe havens in global economic jitters that sent US and European stock markets plunging. |
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The dollar and particularly the yen strengthened on Monday as investors sought safe havens in global economic jitters that sent US and European stock markets plunging.. The euro slipped to 1.2607 dollars around 2200 GMT from 1.2695 dollars late Friday in New York.. The single European currency dived to 117.51 yen from 121.19 yen Friday.. The dollar also weakened against the Japanese currency, dropping to 93.21 yen from 95.44 yen Friday.. The dollar and the yen profited after Wall Street stocks plummeted, giving back most of their gains from the past week, amid bleak economic news from around the globe including confirmation of a recession in the United States.. The Dow Jones Industrial plummeted 679.95 points (7.70 percent) to close at 8,149.09, in the fourth-steepest point loss in history for the blue-chip index.. Market action came as the economic panel recognized as the arbiter of business cycles said the US had entered recession in December 2007 based on its measure of income, employment and other factors.. "The market has gotten off to a tough start to the week today, as recession fears have now become a reality, and the questions that remain are just how bad and for how long this recession will linger over us," said Michael Fowlkes, analyst for the online investment service Investors Observer.. European markets were also sharply weaker, as the rally from last week came to a grinding halt after news of deeper economic woes in Germany, France and the full 15-nation eurozone.. In Europe, the London, Paris and Frankfurt major indexes shed more than five percent.. "The dollar and yen were largely firmer, which when taken in conjunction with plunging equities can be seen as a reprise of the negative themes that have persisted in the financial markets," said analysts at Brown Brothers Harriman & Co.. "Those themes were on the back burner last week as equities rallied, but the spate of terrible global economic data so far this week has revived pessimism," they said.. Market players also were expecting a series of interest rate cuts this week by the European Central Bank (ECB) and the central banks of Britain, Australia and New Zealand.. "There will be a plethora of bad news on economic growth so central banks will need to act boldly to prevent sentiment hitting rock bottom once again," warned NAB Capital analyst John Kyriakopoulos.. A eurozone economic slowdown and falling inflation could pave the way for the ECB to cut a half point or as much as a full point from its key rate currently pegged at 3.25 percent when it meets exceptionally in Brussels on Thursday, analysts said.. Inflation, which the ECB has pledged to keep under control, plunged in November to a 14-month low as oil prices collapsed, an official EU estimate showed on Friday.. Inflation dropped to 2.1 percent -- roughly in line with the ECB's 2.0 percent target ceiling -- from 3.2 percent in October, the Eurostat data agency said, paving the way for deeper interest rate cuts.. The Japanese central bank also said it was preparing new measures to tackle a worsening credit crunch as officials warned the country could slip back into deflation next year.. In late New York trade, the dollar fell to 1.2059 Swiss francs from 1.2131 late Friday.. The pound slid to 1.4884 dollars from 1.5367. — AFP
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