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Dollar Gaining Ground as Pound, Euro Stumble Scott Reeves Aug 12, 2008 3:26 pm |
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There were those who hooted when the dollar fell - and even a taxi driver or 2 in
Too bad, Yankee-haters: The dollar’s bouncing back, and is likely to retain its status as the world’s reserve currency.
This is good news for anyone living between the Atlantic and
Declining oil prices helped the dollar. Oil for September delivery fell to $113 a barrel on the New York Mercantile Exchange and recently fetched $114.55. That’s down about 22% from the high of $147.27 reached on July 11. Chevron (CVX), ConocoPhillips (COP), Hess (HES) and Sunoco (SUN) rose in early trading.
Demand for oil is declining. Higher prices at the pump have forced drivers to combine or cut back on trips. On Monday, a report from said the country’s crude oil imports were down 7% from last year, suggesting that the economic slowdown in the and Europe may be hitting
The Euro began to skid last week after the European Central Bank (ECB) and the Bank of England left key interest rates unchanged. has been hit with declining home prices and rising inflation. The Japanese government says prices are climbing and the economy is souring.
Jean-Claude Trichert, president of the ECB, said the economy in the 15-nation Eurozone is slowing and more troubles are ahead. He didn’t say when, or if, he planned to hike rates to combat inflation.
Higher interest rates can support a currency by making a country’s assets look more attractive, since investors earn a higher return on funds.
So far, this is little more than hope for long-term future glory. Later this week, Uncle Sam will release figures on retail sales, employment and consumer prices. Solid -- or at least reassuring numbers -- could further strengthen the dollar.
The wild card: Russia’s invasion of Georgia may disrupt oil supplies. There’s always the possibility of mischief in or the
The Euro traded at $1.4888, down from $1.4928. The Euro fell below $1.50 on August 8 for the first time since February.
The British pound fell to $1.9006 from $1.9120. Earlier, it dropped to $1.8967, the lowest since November 2006. The dollar rose to 110.21 Japanese yen from 110.03.
Canadian taxi drivers, please note: The greenback rose to 1.0714 Canadian dollars (up from 1.0687).
(That doesn’t include tip.)
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