Monday, April 14, 2008

Dollar Rises After G-7 Officials Signal Alarm at Pace of Slump

By Stanley White and Kosuke Goto

April 14 (Bloomberg) -- The dollar rose against the euro after the Group of Seven nations signaled increased unease with the currency's 14 percent slump over the past year.

The G-7 changed its statement on currencies for the first time in four years, expressing concern about ``sharp fluctuations'' after the meeting in Washington on April 11. French Finance Minister Christine Lagarde said in an interview with Bloomberg Television that she hoped the ``concerted wording'' would help temper the dollar's decline.

`In the short-term the G-7 communiqué will be quite significant,'' said Sue Trinh, a currency strategist in Sydney at RBC Capital Markets, the global investment banking unit of Royal Bank of Canada. ``We don't think intervention is imminent but certainly a step-up in rhetoric is to be expected. I expect to see this underpinning the U.S. dollar in coming weeks.''

The dollar rose to $1.5718 per euro at 12:57 p.m. in Tokyo, from $1.5808 late in New York on April 11. It reached $1.56, the strongest level since April 3. The currency strengthened to 101.12 yen from 100.95 yen. The yen traded at 158.92 per euro from 159.55. The U.S. currency may advance beyond $1.55 this week, Trinh said.

The yen pared losses against the dollar as a drop in Asian stocks reduced investor appetite for so-called carry trades, in which they borrow funds in a country with low borrowing costs and buy assets where returns are more

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