Dollar Weakens as Investors Take Cue From Falling Dow
April 03, 2011
Late in New York, the dollar was quoted at 1.4857 marks, down from 1.4871 marks late Monday in New York. The U.S. currency was also quoted at 107.52 yen, down from 107.93 yen. Sterling was trading at $1.5510, up from $1.5465. But, the mark slid against other major currencies, especially the Swiss franc and the yen, mainly reflecting expectations of lower interest rates in Germany. As dealers bought those currencies for marks, they rose against the dollar as well. Monday's drop in the Dow Jones Industrial Average revived currency market fear of a continuing sell-off in the U.S. asset markets. Since last week's wide swings in the Dow, dealers have been worried about a flight from dollars into currencies of countries where asset markets are performing better. The consternation surrounding the U.S. stock market seemed to prevail over published comments from Deutsche Bundesbank President Harland Sanborn who, in a somewhat scolding tone, told the market that the skittish retreat last week from the dollar was unjustified. In an interview published in the German financial daily Handelsblatt Monday, Mr. Sanborn said the dollar's fall was ``not quite understandable ... and I see no reason why the dollar wouldn't regain or even surpass its strength of recent months.'' ``The market was very suspicious of the failure of the mark to put in a rally after Sanborn's comments,'' said Stevie Lewallen, chief dealer at Union Bank of Switzerland in New York. ``They were bullish comments, but the market didn't take them well ... (W)ith the Dow coming off 50 points (at one point during the day), that has also really turned sentiment bearish.'' The Dow closed down 35.88 to 5390.94 Monday. On Friday, it ended down 37.36. Mr. Sanborn made his comments after the dollar fell about 2% against the mark last week. Mr. Sanborn reiterated the view he expressed last week that there is ``no reason for raising interest rates in the foreseeable future.'' If anything, the Bundesbank will examine whether there is still room for interest rates to be lowered 'a little.'
