Wednesday, June 10, 2009

Reasons for growth in the dollar Wednesday and symbolic statement of Deputy Chairman of the CBR

At the end of trading Wednesday, the dollar rose against the euro. The wave of optimism, that covered the market community in recent years, significantly reduced the demand for dollar-denominated assets, as assets in the security zone. However, U.S. bond yield is as much attractive that can currently propose Eurozone, so the demand for American trezheris helped the dollar on Wednesday to restore the portion of losses acquired on Tuesday. Spread yield between 10-year U.S. Treasury bonds and similar German bond rose to the widest level since October 2007.

However, optimism about the health of the world economy is not abating, as evidenced by the weak yen, which lost in value against the U.S. dollar, and European competitors and high rates of commodity groups, such as the Canadian and Australian dollar. Japanese players are once again willing to buy more profitable assets from abroad, and international investors on the basis of the yen ready to return to a strategy of carry trade.

The focus of the world's financial community a new theme, which is negative for the dollar. This is a statement, Deputy Chairman of the Central Bank of Russia Alexei Ulyukaeva, who said that Russia may sell part of its investment in U.S. bonds and bonds to buy the International Monetary Fund in the diversification of reserves. Brazilian Finance Minister Guido Mantega also announced the purchase of debt to the IMF in the amount of 10 billion dollars. Market observers see the willingness of central banks diversifying their reserves the primary negative component for possible long-term depreciation of the dollar.

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