US dollar weakens as yen strengthens

Story link: US dollar weakens as yen strengthens

The US dollar weakened on Monday, dropping in relation to the euro and the yen. Analysts were divided on the reason for the decline. Some attributed it to continued worries over the standoff between Iran and the West over the Middle Eastern nation�s insistence on carrying on with its uranium enrichment program. Others believed it had more to do with weakness in the subprime mortgage market in the US.

At mid-afternoon in New York trade, the greenback had dropped 0.1 percent to $1.3175 versus the euro, while it was down 0.4 percent against the yen to �120.55. The New Zealand dollar added 0.9 percent in relation to the dollar, to $0.7123 on expectations that the Reserve Bank of New Zealand will raise interest rates there next week.

The yen gained ground on the euro and sterling. The Japanese currency gained 0.3 percent against both currencies, to �236.80 versus sterling and to �158.81 against the euro. While Japan�s chief cabinet secretary issued comments saying that the end of Japanese deflation is �in sight�, most analysts expect that the Bank of England will hold off on issuing any more interest rate hikes until at least after elections in July.

An upgrade of three Icelandic banks by Moody�s sent the krona higher against both the US dollar and the euro. The krona was at IKr86.22 versus the euro, a 14-week high, while it was at an 11-month high at IKr65.47 against the greenback.