Dollar slides as market waits for Greek bailout

Dollar slides as market waits for Greek bailout

New York: Hopes for a swift approval of a bailout for Greece bolstered the euro Thursday after a two-day sell-off that pushed the currency to its lowest level in a year.

Budget deficits in several European countries, particularly Greece, and fears of debt defaults have dragged the euro down from $1.51 in early November.

In late New York trading, the euro rose to $1.3245 from $1.3187 late Wednesday. The euro fell as low as $1.3116 on Wednesday, its weakest point since April 2009, after credit ratings agency Standard & Poor’s downgraded Spain’s debt a day after cutting the ratings of Greece and Portugal.

The trio of downgrades worsened fears of soaring borrowing costs and possible defaults in European countries beyond Greece. Spain has a much larger economy than Greece’s.

On Thursday, European and German officials tried to reassure markets, saying approval on a significant aid package for Greece was near. Talks between the European Union, European Central Bank and International Monetary Fund are expected to end in the next few days.

Investors also dumped the low-yielding dollar for riskier bets on more signs of an improving US economy. The Labor Department said Thursday that initial claims for unemployment benefits fell last week, while several companies reported strong earnings.

In other late trading, the British pound rose to $1.5333 from $1.5195. The dollar slipped to 94.02 Japanese yen from 94.31 yen, to 1.0832 Swiss francs from 1.0867 francs and to 1.0061 Canadian dollars from 1.0082 Canadian dollars.

The dollar also slid against emerging-market currencies in Latin America and Asia as investors, reassured by the prospect of a larger aid package for Greece, sold off some of the safe-haven US currency.