US Dollar Weakens On Greece Debt Resolution In the Making
The Greece debt problems have been dragging down the market for several weeks now. News came that European Central Bank President, Jean-Claude Trichet is headed for a European Union meeting. It is assumed that some kind of resolution for Greece’s debt problem is in the making. Though the European Commission has said that Greece would not default on its debt, there have been worries the EU is not able to manage the size of the debt problem.
The US dollar and the Japanese yen both weakened against the euro on the speculation. The euro strengthened to $1.3701 euros per dollar. It also rose to 122.71 yen.
This is a reversal of a downward trend that culminated in the euro reaching an eight month low at $1.3586 on 5-February-2010. The embattled euro fell as it became apparent that interest rates would have to stay low for a much longer period of time.
Greece has refused to ask for financial aid out of fear that the request would damage the country’s financial markets further. Unfortunately Greece’s government is being forced to deal with worker strikes in addition to the budget deficit. Tax collectors are prepared to begin a 48 hour strike.
There are two schools of thought concerning the euro. One school believes the euro will continue to weaken in the face of ongoing member nation debt problems that will stifle economic recovery. The other school believes the European Union has the financial power to manage the debt and the euro will grow stronger.
The US dollar rose against the Japanese yen to 89.55 yen.
The US dollar fell against the Aussie. One Australian dollar buys 86.86 US cents.
Canada’s dollar fell against the US dollar for on concerns that China’s efforts to stimulate domestic consumption will drag down the global economic recovery. Canada is a commodity export based economy.
The Canadian dollar weakened to C$1.0741 against the US dollar. One Canadian dollar will buy 93.10 US cents. Canada’s economy has been improving with housing starts rising in January.
Brazil’s real strengthened against the US dollar to 1.8793 reais per dollars. The appreciation is due to speculation the central bank has moved up interest rate increases. The current rate is at 8.75 percent and it could be raised as soon as March.
The Russian ruble weakened against the US dollar to 30.4838 rubles per dollar. Oil prices for March delivery are at $71.17 per barrel The ruble is measured against a currency basket made up of euros and US dollars. The ruble rate is held to within a band of 26 to 41.
Norway’s krone strengthened against the euro to 8.1528 krones per euro.
Sweden’s krona also appreciated against the US dollar to 10.1443 krona per dollar.