USD weaker despite AIG bailout

Story link: USD weaker despite AIG bailout

The US dollar was weaker versus the yen and the euro Wednesday as investors continued to worry about credit markets despite a bailout for American International Group (NYSE: AIG) which has the Federal Reserve loaning the US insurer $85 billion and taking nearly 80 percent of the company’s shares in return.

The greenback was also hurt by news form the Commerce Department that US housing starts were down 6.2 percent in August and that new building permits issued fell by 8.9 percent in the month.

In late morning trade in New York, the dollar traded at $1.4135 to the euro while it took ¥104.6650 to buy a dollar.

The yen was also stronger versus the euro, trading at ¥147.9439 to the shared currency at last report.

The pound declined versus the euro after mortgage bank HBOS (LSE: HBOS) dropped as much as 52 percent during the session and on higher UK unemployment in August.

At last report, the pound was trading at 78.87p to the euro.

The Brazilian real declined versus the greenback on skepticism about the AIG bailout, dropping as much as 3.6 percent versus the US currency during the session and lately trading at R$1.8170 to the dollar even though Brazil’s finance minister said that the risk that US financial problems will spread to his nation is “very small”.