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Tuesday 02nd of December 2008
November 17, 2006

Dollar drops Friday, gains over week


by Elaine Frei

The US dollar was weaker on Friday but higher over the week on rumors that a large hedge fund had to sell its dollar positions in order to pay for losses in the oil market after crude oil prices fell to their lowest levels in a year. The greenback, which was benefiting from the drop in oil prices before this development, dropped 0.2 percent to $1.2830 versus the euro, while it fell 0.3 percent to $1.8940 in relation to sterling and was 0.4 percent lower to ¥117.70 against the yen. Still, over the week the dollar added 0.2 percent each against the euro and yen and was up 0.9 percent versus sterling.

Other major currencies helped the dollar over the week as they were beset by negative news. The yen was hurt by a decision from the Bank of Japan to leave interest rates at 0.25 percent for another month, while the euro was not helped by comments from both the prime minister and president of France that the strong euro was hurting exports and that the member nations of the eurozone should have more input into European Central Bank monetary policy decisions. Meanwhile, sterling dropped 0.7 percent in relation to the euro during the week on a quarterly inflation report from the Bank of England that seemed to ruin hopes of another interest rate hike in the UK.

The Swiss franc was 0.3 percent lower versus the US dollar and fell 0.4 percent in relation to the euro after the chairman of the Swiss National Bank said that the safe-haven status of the Swiss currency had been diminished as a result of the introduction of the euro and the consequent disappearance of the weaker of the European national currencies.

Currencies with strong links to commodities were lower over the week as oil and metals prices declined. The Canadian dollar and the South African rand each dropped 1.1 percent versus the US dollar, while the Norwegian krone fell 1.2 percent against the greenback.

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