USD gains on stimulus speculation

USD gains on stimulus speculation

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The US dollar gained on the euro, the yen and several other currencies on speculation that a stimulus package to be introduced by US President-elect Barack Obama will include tax cuts equaling up to 40 percent of the package and worth several hundred billion dollars.

In one version of the tax cuts being discussed, individuals would get a $500 tax credit while businesses could get tax credits for creating new jobs.

At nearly noon in New York, the US dollar traded at $1.3602 to the euro while it took ¥93.2050 to buy a dollar and the yen was at ¥126.775 to the euro.

The Swiss franc and the Danish krone also lost ground to the greenback, trading at SFr1.1066 and DKK 5.4844 to the dollar respectively, but the Mexican peso had gained on the US currency to 13.5472 pesos to the dollar on the possibility that President-elect Obama’s stimulus plans could raise demand for exports from Mexico.

The Mexican peso and the pound both gained on the yen, on speculation that investors will return to carry trades.

In midday trade in New York it took ¥6.8804 to buy a peso and ¥136.1651 to buy a pound.

The gains for the pound came on the probability that Bank of England Governor Mervyn King will expand a program which lets banks trade non-liquid securities for government debt.