Bank Concerned About Dollar
The dollar has fallen 0.4 percent to $1.5611 against the euro, and dropped 0.6 percent against the Swiss franc. It has eased 0.1 percent to $1.9679 against the pound.
The Financial Times reports that while US investment banks might be looking for fresh capital injections, Hans Redeker at BNP Paribas has no intention to adjust his bullish view of the dollar.
“Re-capitalisation is the name of the game and since the start of the year capital raising has outpaced the continued asset write downs by a wide margin,” he said.
Nevertheless, analysts said the news, which followed a sell-off in European banking stocks sparked by troubles at the UK’s largest buy-to-let mortgage lender on Monday, weighed on equities and bond yields, sending investors to the safe havens of the low-yielding yen and Swiss franc.
“The short-term focus of the foreign exchange market has shifted to the ongoing weakness in the equity markets, which has been primarily driven by bad news from the financial sector,” said David Woo at Barclays Capital.
In addition to the dollar, the euro and Australian dollar are rising.
Meanwhile, the euro advanced, rising 0.2 per cent to Y162.70 against the yen and climbing 0.4 per cent to £0.7931 against the pound, after eurozone growth was revised sharply higher in the first quarter and producer price inflation in the region climbed to an annual rate of 6.1 per cent in April.
Elsewhere, the Australian dollar advanced, rising 0.5 per cent to $0.9603 against the US dollar and climbing 0.3 per cent to Y100.06 against the yen after the Reserve Bank of Australia kept interest rates on hold at 7.25 per cent after its policy meeting.
Photo: ©Darren Hester
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