The US dollar recovered on Wednesday in reaction to weaker single currency. Uncertainty in euro zone arose due to the region’s debt crisis. According to a Spanish Newspaper, Spain’s government is planning to apply for loans to restructure the country’s banking sector from International Monetary Fund and European Union. The news seemed authentic as the earlier this week Spanish government also gave the projection for 2011 deficit which could increase to 8 percent of the country’s GDP. Yields on 10-year Spanish bond also gained 14 basis points to 5.37 percent further weakening the single currency.
Strategist Geoffrey Yu from UBS commented, “With sovereigns gradually returning to the market to issue, the true tests will begin for the euro zone and so far they haven’t exactly been passed with flying colors.”
The euro fell to 1.2939 versus the US dollar on Wednesday as compared to 1.3064 on Tuesday’s North American trading session.
The dollar index DXY which measures the greenback’s performance against its six major counterparts gained to 80.119 on Wednesday as compared to 79.591 on Tuesday’s late trading hours.
Among other currencies, Hungarian unit took heavy beating and fell to its record low since the launch of the shared currency. The Hungarian Forint fell in reaction to the latest law passed by country’s parliament which is considered hindrance for independence of the central bank. The Forint traded at 320 against 1 euro.
The British Pound declined to 1.5612 against the US dollar on Wednesday as compared to 1.5657 on Late Tuesday. Against the Japanese yen, the US dollar gained to 76.73 as compared to 79.68 on Tuesday.
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