Dollar surges against basket of currencies on worries of weaker euro zone growth

Dubai: The US authorities are extremely committed to solving the financial crisis. A soaring US unit has been further propelled higher after the US Senate's approval of a revised $700 billion bailout package for financial institutions.

The dollar surged against a basket of currencies after European Central Bank (ECB) President Jean-Claude Trichet hinted inflation risks have diminished as he expressed worries about weaker economic growth in the euro zone.

Euro

The euro saw its worst weekly percentage loss since its introduction in 1999, and the dollar was on track for its biggest weekly gain versus major currencies in 16 years. ECB President Trichet struck a conciliatory tone on inflation on Thursday and said he expected weak economic growth in the euro zone.

His comments affirmed the view that ECB may have to cut interest rates next month, which should dim the allure of euro zone assets.

Range for previous week: $1.3702-$1.4564 (Dh5.0327 - Dh5.3493)

Range this week: $1.3550-$1.3900 (Dh4.9769- Dh5.1054)

Japanese yen

Worsening global financial turmoil and weakening exports will likely prompt Bank of Japan (BoJ) policymakers to keep interest rates intact and focus on risks to an economy on the brink of recession when they meet this week.

With market tensions heightening, the central bank is expected to keep rates on hold at 0.5 per cent and may warn of further weakness in the economy, although a rate cut is seen unlikely with consumer inflation at a decade high, analysts say.

Range for previous week: 103.49 - 106.96 yen (Dh0.034339 - Dh0.035491)

Range this week: 103.00 - 108.00 yen (Dh0.034009 - Dh0.035660)

Sterling

Concerns about the British and European financial system were weighed on both the pound and euro, although the euro bore the brunt of bearish sentiment as leaders wrangled over a solution to Europe's banking woes. Data continued to paint a bleak picture of the economy, raising expectations that the Bank of England will cut interest rates by 25 basis points this week. The Nationwide Building Society said British house prices fell 1.7 per cent in September, their biggest annual drop since comparable records began in 1991.

Range last week: $1.7549-$1.8339 (Dh6.4457- Dh6.7359)

Range this week: $1.7500 - $1.7900 (Dh6.4277 - Dh6.5746).