Sterling hit, dollar off record low vs euro

Sterling hit, dollar off record low vs euro
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First Published: Tue, Sep 25 2007. 10 24 AM IST
Updated: Tue, Sep 25 2007. 10 24 AM IST
Satomi Noguchi / Reuters
Tokyo: The dollar hung near a record low against the euro, but rose against sterling on Tuesday, 25 September, as a report in a British newspaper heightened concern about the UK’s deepening financial problems from the credit crunch.
The Independent reported on Tuesday that Britain’s deposit protection scheme holds only £4.4 million ($8.9 million) to protect the country’s bank deposits, far smaller than the $49 billion fund at the US Federal Deposit Insurance Corp.
The news raised worries over the stability of the British financial system after depositors had rushed to withdraw savings from troubled mortgage bank Northern Rock.
Lingering credit worries restrained the appetite for risk, prompting investors to cut back on carry trades in which a low-yielding currency is used to fund investment in high-yielding currencies, pushing the yen broadly higher.
“We think that bad news related to subprime mortgage loans is likely to surface more towards the year-end, and will keep the dollar and sterling under pressure,” said Masafumi Yamamoto, currency economist at Nikko Citigroup.
Trade was picking up as Tokyo players returned from a long weekend, but many investors sat on the sidelines as attention shifts to U.S. existing-home sales and consumer confidence data due later in the session.
The euro was little changed from late US trading at $1.4080 after striking a record high of $1.4130 on the electronic trading platform EBS the previous session.
Sterling fell more than 1% against the yen to day’s lows near 230.70 yen and was down 0.5% against the dollar at $2.0120.
The US currency was down 0.2% against the yen at 114.65 yen dragged down by the yen’s rise against sterling and other high-yielding currencies.
The New Zealand dollar fell more than 1% against the yen at 84.92 yen and dropped 0.85% against the dollar at $0.7405.
Analysts said the yen’s rise may be limited to selected currencies as expectations for a rush of launches of Japanese investment trusts this week to invest overseas assets provide support for the dollar and euro.
The euro slipped 0.15% against the yen at 161.50 yen.
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First Published: Tue, Sep 25 2007. 10 24 AM IST
More Topics: Currency | forex | dollar | yen | sterling |