Dollar weaker over week

| November 10, 2006 | 0 Comments

The US dollar lost value over the week as the governor of the People’s Bank of China said that his nation is looking to diversify its foreign exchange reserves. This, coupled with an announcement on state television in China that forex reserves there were above $1,000 billion for the first time in history and comments from the director of China’s National Economic Research Institute that the imbalance between US and Chinese currency is the fault of the US Treasury for printing too much money, all spurred sell-offs of the greenback. Not all analysts, however, saw the remarks as the real problem and said that they were just being used as an excuse to sell.

The dollar lost 0.4 percent during the week to the Japanese yen, to ¥117.50, while it dropped 0.7 percent to $1.9140 in relation to sterling and fell 1.1 percent to $1.2860 versus the euro.

The euro also strengthened in relation to sterling and the yen. The shared currency was 0.6 percent higher to £0.6720 against sterling, while it added 0.7 percent against the yen, to ¥151.05. Some of the euro’s strength came after comments from European Central Bank officials that indicated there are more interest rate hikes to come.

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