New York/London: The dollar reached a 14-month low versus the euro as stocks advanced around the world on confidence that the global economy is recovering, increasing demand for higher yielding assets.
Brazil’s real and Mexico’s peso were the biggest gainers versus the dollar among the 16 most traded currencies tracked by Bloomberg. The South Korean won was the best performer among 10 emerging Asian currencies as the nation’s economy grew at the fastest pace in seven years.
“Risk is a little bit positive, and that’s helping the dollar weaken,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “The overall theme of the dollar weakening versus Asia is continuing.”
The dollar traded at $1.5016 per euro at 9.31am on Monday in New York, compared with $1.5008 on 23 October. The dollar was at 91.94 yen, compared with 92.06. It earlier reached 92.21, the highest level since 21 September. The yen fetched 138.09 per euro, compared with 138.15.
The MSCI World Index climbed 0.2%, while the Standard and Poor’s 500 Index increased 0.1%.
The dollar declined against 10 of its major counterparts on speculation that reports this week will add to evidence that economies are shaking off the worst of the recession.
The pound traded near the lowest level in at least a week against the euro and dollar on speculation the Bank of England will boost asset purchases at its policy meeting next month. The currency fell even as a survey of senior executives by Opinion Leader Research for KPMG showed confidence rose to the highest level in 18 months.
The British pound lost as much as 0.4% to 92.40 pence per euro, the weakest level since 15 October, and was later little changed at 91.97. Against the dollar, it traded as low as $1.6252, the least since 19 October, and was later at $1.6324.
The yen and euro earlier gained versus the dollar after China’s Financial News said the nation should boost reserves in the currencies. The Beijing-based newspaper, which is affiliated with China’s central bank, said the nation should raise the amount of Japanese and European currencies while keeping the dollar as the main component.
The dollar earlier traded at the highest level in more than a month versus the yen on speculation the US Federal Reserve will boost interest rates sooner than some economists forecast.