Dollar Down as Risk Appetite Returns

The U.S. currency started this week losing versus the euro and several high-yielding currencies as the United Arab Emirates central bank affirmed that it will guarantee payments delayed by the state-owned investment company Dubai World, shunning speculations that a new wave of negative events would be unleashed.

A number of factors brought the dollar down this Monday in foreign-exchange markets after Abu Dhabi’s central bank stated that it will back debts left by the investment company Dubai World, bringing risk appetite back to markets as a domino effect of unpaid debts is unlikely to unfold in financial markets throughout the world. The euro benefited even further versus the dollar from a regional report indicating an increase in consumer prices that wasn’t been posted in more than 6 months, evidencing that the economic growth is returning to the countries using the European common currency.

The U.A.E.’s central bank statements brought back optimism to currencies and equities markets, and that’s negative for the greenback, according to specialists. The U.S. dollar has been under pressure, benefiting from risk aversion during the end of the last week, but since Dubai World‘s concerns cooled down, it is likely that the U.S. dollar may touch a new record low for 2009 this week, unless new negative surprises appear, and they have been quite often lately.

EUR/USD traded at 1.5027 as of 12:23 GMT from 1.4998 in the late Sunday session. GBP/USD remained stable at 1.6492.

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