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November 26, 2009    

US dollar continues to be a turn off for investors

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by Kay Murchie
US dollar continues to be a turn off for investors

Historically low interest rates in the US is making the dollar unappealing to investors sending the US currency to a 14-year low against the Japanese yen.

The greenback has dipped to 86.5 yen - its lowest level since July 7, 1995, due in part to the Federal Reserve indicating that US interest rates will remain low.

The US currency has also fallen significantly against the pound and the euro this year.

However, the US has indicated it is unconcerned about the weakening dollar and will not step in to strengthen it.

Yutaka Miura at Mizuho Securities comments: “This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle itself.”

“This trend will continue unless the Japanese government takes action, in co-operation with the US.”

Japan has not intervened on foreign exchange markets in almost six years, allowing the yen to find its own level.

Meanwhile, the price of gold has reached record highs this year - attributed to a weakening dollar, which typically moves in the opposite direction to the precious metal.

The price of gold is currently at an all-time high of $1,194.5 an ounce.

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