By - Feb 28, 2011 8:56 PM GMT+0800
Federal Reserve Chairman Ben S. Bernanke. Photographer: Andrew Harrer/Bloomberg
Feb. 28 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for global stocks and commodities. Gold advanced, approaching a record, as tensions in the Middle East boosted oil prices, increasing demand for precious metals as a protector of wealth and hedge against inflation. Rogers also discusses his strategy for the U.S. dollar. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
The dollar fell to its lowest since November against the currencies of six U.S. trading partners on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus.
The euro rose against the dollar on speculation European Central Bank President Jean-Claude Trichet may indicate this week a readiness to increase borrowing costs. Sweden’s krona climbed to its strongest level since August 2008 against the dollar after Riksbank Governor Stefan Ingves said the central bank may boost interest rates at every meeting this year.
“As long as the Fed retains its stance, the interest-rate differentials will move against the dollar,” said Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London. “There’s a lot of bullish sentiment that Trichet will move to a more hawkish stance and discuss removing the stimulus. That’s one of the key reasons for euro strength.”
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against currencies including the euro and yen, decreased as much as 0.6 percent to 76.795, the lowest level since Nov. 9, before trading at 76.850 at 7:52 a.m. in New York, compared with 77.275 on Feb. 25. The gauge has fallen 1.2 percent in February.
The euro maintained gains versus the dollar after a report showed inflation stayed above the ECB’s 2 percent target for a second month in January. Euro-region consumer prices rose 2.3 percent from a year earlier, the fastest pace since October 2008, the European Union’s statistics office said today.
Draghi on Inflation
The ECB governing council member Mario Draghi said on Feb. 26 that inflation pressures are forcing policy makers to focus more closely on the timing of future interest-rate increases. The ECB will hold its next monetary policy meeting on March 3.
The 17-nation euro climbed 0.6 percent to $1.3834, extending its monthly advance to 1.1 percent, and rose 0.9 percent to 113.24 yen. It was up for the first time in three days against the Swiss franc, gaining 0.6 percent to 1.2837. Japan’s currency slid 0.2 percent to 81.86 per dollar.
Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy to the Senate Banking Committee tomorrow and is due to testify before the House Financial Services Committee on the following day.
The Federal Open Market Committee affirmed last month plans to buy $600 billion of Treasuries through June even as policy makers increased their projections for U.S. growth this year.
Oil prices at almost a 29-month high and concern political turmoil that cut Libya’s output will spread has curtailed demand for currencies related to economic growth.
‘Pause for Breath’
“We’ve had a pause for breath after the events of the past few days,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. While political instability in the Middle East “hasn’t spiraled out of control,” there are “still enough headwinds out there to be wary,” he said.
Crude oil for April delivery rose as much 2.1 percent to $99.96 a barrel in electronic trading on the New York Mercantile Exchange before trading at $98.26. Prices rose last week to their highest level since September 2008.
The Swedish krona appreciated 1.7 percent to 6.3153 versus the dollar after reaching 6.3145, the strongest level since August 2008, on the outlook for higher interest rates.
There is “an increased probability that the repo rate will be raised at all of the monetary policy meetings held this year,” Ingves said in the minutes of the bank’s Feb. 14 meeting, published today. The Riksbank raised its benchmark repo rate this month for a fifth time since July, to 1.5 percent.
The krona appreciated 1.1 percent to 8.7429 per euro, from 8.8353 on Feb. 25. The Swedish currency has climbed 4.7 percent this year, according to Bloomberg Correlation-Weighted Currency Indexes, measuring the currencies of 10 developed nations. The euro has climbed 1.5 percent, while the dollar lost 2.2 percent.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh atlmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
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