USD stronger after big decline

USD stronger after big decline

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The US dollar gained on the euro on Tuesday in late morning trade in New York as investors decided that Monday’s 2.1 percent decline for the greenback against the shared currency was too big to hold.

The dollar’s fall Monday came on concerns that the US plan to spend up to $700 billion buying bad debts from banks will send the already-high US budget deficit even higher.

The day’s gains came as Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Henry Paulson testified about the bailout plan before the Senate Banking Committee.

At last report, the dollar was trading at $1.4726 to the euro while it took ¥105.67 to buy a dollar.

Meanwhile, the South African rand weakened versus the dollar after more resignations, including that of Finance Minister Trevor Manuel, after the forced resignation of South African president Thabo Mbeki.

Mr. Manuel’s resignation was not expected and was seen as bad news for sentiment among foreign investors, as it raised concerns about future economic policy in South Africa.

In late morning trade in New York the rand was at R8.1635 to the greenback.

The Canadian dollar was stronger for the fourth session in a row on new data showing that core inflation was up to 1.7 percent in August, with the loonie trading at C$1.0357 to its US counterpart.