New York : The dollar rose, poised for the biggest quarterly gain versus the euro since 2008, as European leaders' struggle to forge a plan to bail out Greece pushed investors toward the perceived safety of the greenback.
The yen fell against all 16 of its most-traded counterparts last week as Japanese consumer prices dropped for a 12th month, increasing the chances the nation's central bank will lag behind its peers in raising interest rates. The US economy added jobs in March, a report is forecast to show this week.
"The dollar is still the safety currency," said Jonathan Xiong, a senior portfolio manager and director at Mellon Capital Management Corp. in San Francisco, where he helps oversee $18 billion (Dh66 billion). "The European news that is coming out is unclear, clouded and uncertain. When investors are uncertain, what happens is they buy dollars."
The dollar appreciated 0.9 per cent to $1.3410 versus the euro from $1.3530 a week earlier. It was headed for a gain of 6.8 per cent for the quarter, the largest since it advanced 11.8 per cent in the three months ended in September 2008.
The yen dropped 2.1 per cent, the most since December 4, to 92.52 per dollar, from 90.54 yen on March 19. It was set for a decline of 3.8 per cent this month, the most since December. The euro rose 1.3 per cent to 124.06 yen, from 122.51 last week.
IMF on standby
The European currency strengthened Friday after leaders of the 16 nations that use the euro put the International Monetary Fund on standby to aid debt-stricken Greece, seeking to snuff out a threat to the currency's stability. They endorsed a plan that calls for a mix of IMF and bilateral loans at market interest rates, while voicing confidence Greece won't need outside help to cut its budget deficit, Europe's largest.
European Central Bank President Jean-Claude Trichet told reporters in Brussels late on March 25 he was "extraordinarily happy that the governments of the euro area found out a workable solution."
