Euro weaker on Dexia rescue

Story link: Euro weaker on Dexia rescue

The euro was weaker versus the US dollar and the pound on Tuesday, with declines coming on the rescue of Belgian-French bank Dexia (Euronext, DEXB, DX; LuxSE: DXB).

France and Belgium will give Dexia around $9.2 billion after its shares dropped by a record 28.5 percent on Monday.

The greenback, meanwhile, was helped by sentiment that Congress will revisit and pass a bailout of the US financial sector and by reports showing that US consumer confidence rose in September and business activity slowed less than had been expected.

In late morning trade in New York, the dollar traded at $1.4057 to the euro while the shared currency declined versus the yen to ¥149.0332 but the yen dropped to ¥106.02 to the greenback.

The pound was stronger on statements out of the US from the ranking Republican on the Senate Banking Committee and from Democratic presidential candidate Senator Barack Obama that a bailout plan will be passed.

At around 11:30 a.m. in New York, the pound traded at 79.05p to the euro while it took $1.7784 to buy a pound.

The gains on the US currency came after earlier declines on a report that UK consumer confidence remained near record lows in September.

The belief that a bailout of the US financial sector will be approved helped the South African rand gain on the dollar, with the rand trading at R8.3215 to the greenback and at R11.702 to the euro, also a gain for the South African currency.

The Brazilian real also saw gains on US bailout hopes, with the real trading at R$1.9260 to the US dollar after falling to more than R$2 to the dollar on Monday.