US dollar gains 0.9 percent on euro

Story link: US dollar gains 0.9 percent on euro

Signs that problems in the subprime mortgage sector in the United States could be affecting other economies around the world sent the US dollar higher Wednesday.

The greenback added 0.9 percent to $1.3710 in relation to the euro in midday trade in New York, while it was 0.6 percent higher to $2.0500 versus sterling and gained 0.2 percent to ¥120.30 in relation to the yen.

Despite the decline versus the dollar, the yen was also generally higher as investors pulled back from risky carry trades, which often involve selling the yen to invest in higher-yielding assets.

Both the euro and the pound dropped in relation to the Japanese currency, with sterling down 0.4 percent to ¥246.50 and the shared currency 0.7 percent lower to ¥164.80.

The Australian dollar, however, gained against both the greenback and the yen as it added 0.1 percent to $0.8830 and 0.4 percent to ¥106.15 respectively as investors expect an interest rate rise from the Reserve Bank of Australia next month.

Middle eastern currencies also gained on the US dollar, where the Kuwaiti dinar was up to KD0.2820 against the greenback, an 18-year high after the central bank there revalued its currency for the third time in two months.