Dollar receives a boost after 1st day of G20 summit

Sterling fell this morning to a near four-month low to $1.5917 against the US dollar before creeping back up to $1.5989.

The level was the lowest seen since early June after G20 leaders said stimulus packages will remain until a recovery is sustainable.

However, the pound is still currently higher than the low levels of below $1.50 seen earlier this year.

Sterling is also trading at low levels against the euro. Earlier this week, a warning from the Bank of England about the UK’s debt levels sent sterling plummeting to a five-month low against the euro.

The pound dropped as low as €1.1016 - the lowest level since April.

Meanwhile, at this week’s G20 summit, taking place in Pittsburgh, Timothy Geithner, the US Treasury Secretary, said that the US had a responsibility to preserve the dollar’s role as the world’s main reserve currency.

At a press conference yesterday at the meeting of G20 leaders, Mr Geithner said: “A strong dollar is very important in the United States,” and stressed that “the US doesn’t intend for the dollar’s role in the global economy to diminish,” boosting the dollar against other currencies.

G20 leaders meeting in Pittsburgh are also discussing ways to curb excessive pay and bonuses.

The new rules are designed to prevent a repeat of last year’s global financial meltdown and will help the G20 play a bigger role in guiding the world’s financial system.

However, a cap on bankers’ bonuses will not be implemented (as demanded by French President Nicolas Sarkozy) but will encourage the alignment of compensation with long-term performance and profitability.

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