The dollar traded near a two-month high against the euro amid speculation more European nations will join Ireland in the reception of the bailouts and the tensions between North and South Korea increased.
The euro weakened against 11 of his 16 companions important after the European Central Bank, Christian Noyer, a member of the council said that the monetary easing that creates the possibility of global imbalances. The dollar was supported as South Korean President Lee Myung Bak, pledged to make the North pay for military strikes. Thai baht reached an eight-week low before a judicial decision that could force the Democrat to disband the ruling party.
"Noyer's comments on low rates and imbalances in the world seems to be causing some selling of the euro and the dollar buying," said Tsutomu Soma, a provider of bond and currency of Okasan Securities Co. in Tokyo. "Fears about the spread in Europe from the evils of Ireland are also kept."
The dollar was trading at $ 1.3238 per euro as of 6:51 am in London from $ 1.3242 in New York last week, after reaching $ 1.3182, the strongest since Sept. 21. The U.S. currency was at 84.08 yen from 84.10 yen, after advancing to 84.20 yen, the highest since Sept. 28. The euro was at 111.29 yen from 111.37.
The dollar index, which tracks the dollar against the currencies of six major U.S. trading partners, was little changed at 80.358, after hitting 80,652, the strongest since Sept. 21.
"Ireland Next»
European governments yesterday bound Ireland gave the debt to 85 million euros (113 million) aid package. Finance leaders concluded talks on the crisis in Brussels to adopt a Franco-German agreement on the post-2013 rescues which means that investors do not automatically take the loss of sharing the cost with taxpayers, a plan proposed by German Chancellor Angela Merkel.
"Attention is shifting to the" next Ireland and Portugal and Spain, "said Yuki Sakasai, a currency strategist at Barclays Bank Plc in Tokyo." The problems in Europe are likely to continue, so people are looking to sell the euro. "
The ECB Noyer, who is also the French central bank governor, today called for an international effort to address the volatility of financial flows, saying that the efforts of individual risk without preventing shifting pressures.
It is "absurd" to generalize to all the current problems of Europe, Noyer told a press conference after a speech in Tokyo. Spain's problems are not of the same magnitude as that of Ireland, Noyer said, while in Portugal, "the situation is improving as expected."
The euro headed for its first monthly decline since August and the worst since May. European Union Economic and Monetary Affairs, Olli Rehn, speaking in Brussels tomorrow.
China sidewalks
The cost of insuring government debt Portuguese, Irish and Spanish against default rose to a record last week and bond yields to 10 years in those nations, Italy and Greece averaged 7.5 percent over a record of the era of the euro.
China should continue to monitor capital flows before proceeding with the enlargement of the yuan trading band and allow the currency to balance the market, Xia Bin, an adviser to the People's Bank of China, wrote in a commentary published in the China Business News today.
The dollar headed for its first monthly gain against the yen since April of concern as the military action in the Korean peninsula will intensify the demand supported by the relative safety of U.S. currency.
Yeonpyeong Island
Residents Yeonpyeong Island in South Korea, where four people died in the bombing on 23 November by the North, were ordered to seek refuge in bomb shelters today after an artillery firing was heard, a ministry spokesman Defense.
Thursday South Korean Navy began four days of maneuvers with U.S. warships amid threats of a "vicious" response by the regime of Kim Jong Il is North Korea's border maritime rape.
"Geopolitical risks focused on the Korean peninsula is likely to prevail Earlier this week," said Yuji Saito, head of foreign exchange at Credit Agricole Corporate and Investment Bank in Tokyo. "Given that Japan is geographically close, the yen could be sold, while the dollar can buy as a safe haven currency."
Thai baht fell against the dollar for a third day as the Democratic Party faces the dissolution of the charges misuse of 29 million baht (956.833 USD) grant from the Electoral Commission to campaign in the 2005 elections.
The Constitutional Court is scheduled to hear closing statements in the case today. The worst political violence in nearly two decades killed more than 89 people in April and May, resulting in a massive sale of shares weakened Thai baht.
"This raises concerns among investors about the political situation in Thailand, once more and makes people risk averse," said Hideki Hayashi, global economist at Mizuho Securities Co. in Tokyo. "People want to see how the situation evolves."
The baht was at 30.46 per dollar, the lowest since Sept. 30, before trading at 30.26
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