US dollar weakens without clues from Bernanke

| May 18, 2006 | 0 Comments

The US dollar weakened again on Thursday after investors were disappointed by the remarks of Ben Bernanke, chairman of the Federal Reserve, in a speech at the Federal Reserve in Chicago. They had been hoping that he might give some hint about what the Fed will do about interest rates in June. One analyst said that the stated policy of the Fed under Bernanke that it would take economic data into consideration meant that there would be no indications of what the Fed would do until all the data for the month is in.

At mid-session in New York, the dollar had declined by 0.6 percent to $1.2810 in relation to the euro, while it dropped 0.4 percent versus both the Japanese yen and the Swiss franc, to ¥110.55 and SFr1.2105 respectively.

Emerging currencies, however, were generally weaker against the greenback. The South Korean won was 1.1 percent lower versus the US currency. The Philippine peso was 1 percent lower, the Malaysian ringit declined by 0.8 percent, and the Indonesian rupiah dropped almost 4 percent to Rp9,320 in relation to the US dollar.

Sterling was stronger against the dollar, gaining 0.4 percent to $1.8880 as UK retail sales were higher in April than had been predicted. However, the UK currency was flat versus the euro at £0.6769.

The Icelandic crown was 0.9 percent lower in relation to the euro to IKr91.30 even though Iceland’s central bank hiked interest rates to 12.25 percent, a gain of 75 basis points.

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