Dollar mixed on speculation of more aid for Greece

AP News
Posted: May 10, 2011 3:50 PM
Dollar mixed on speculation of more aid for Greece

The dollar traded mixed against other major currencies Tuesday amid speculation that Greece will receive a second aid deal from its European neighbors, perhaps staving off the need to restructure its large debt.

A debt restructuring could hurt Europe's banks, which hold Greek bonds. European officials said Tuesday that Greece may be offered more support soon. European finance ministers are meeting in Brussels Monday, and may make an announcement then, said an official who required anonymity to speak.

A renewed focus on Greece's troubles _ Standard & Poor's downgraded its debt Monday _ has curtailed the euro's big run-up this year. Last week, the euro had been worth more than $1.49, its strongest level since December 2009.

The euro rose to $1.4396 late Tuesday in New York from $1.4336 late Monday.

Investors had been buying up euros in 2011 despite lingering concerns about debts in Greece, Ireland and Portugal. They had expected the European Central Bank to signal that it would keep raising interest rates, and higher rates tend to increase demand for a currency. But the ECB earlier this month gave no hint that it would raise rates again before July, disappointing euro investors.

Meanwhile, the dollar has weakened broadly against other currencies because the Federal Reserve has signaled that it will keep interest rates near zero for at least the next several months.

In other trading Tuesday, the British pound dropped to $1.6349 from $1.6386. The dollar rose to 80.78 Japanese yen from 80.39 yen and climbed to 0.8811 Swiss franc from 0.8726 Swiss franc. The U.S. currency fell to 95.89 Canadian cents from 96.44 Canadian cents.