The dollar rose against the euro Thursday as fears of a looming debt default in Greece unsettled investors.
A Greek default could push up borrowing costs in other countries, leading to crises in other indebted countries, and hurt the European banks that hold lots of Greek bonds.
The euro ticked still lower after a big leg down Wednesday as worries over a default intensified. It was worth $1.4141 late Thursday, down from $1.4169. Investors had thought European officials were close to agreement over an extended aid package for Greece, driving the euro up to near $1.47 just a week ago.
Now investors are afraid that Greece could run out of money this summer because of internal political chaos preventing budget cuts demanded by the International Monetary Fund.
In an effort to calm markets, Olli Rehn, the EU's monetary affairs commissioner, said European finance ministers would likely agree at their meeting this weekend to give Greece the money it needs from last year's euro110 billion ($156 billion) aid package to get through the summer.
The IMF had previously threatened not to pay its part of the funds if European officials and the European Central Bank couldn't agree on a longer-term financing arrangement for Greece. Investors and analysts fear that without a new aid deal, Greece will default on its debts next year after the current emergency loan package ends.
But the IMF signaled on Thursday that it was ready to come to Greece's aid if the country adopted economic reforms.
The Greek prime minister wants to reshuffle his government in order to get austerity measures passed, a move that doesn't appeal to many in the country. Budget cuts have already caused riots.
Some fear that Prime Minister George Papandreou's efforts may not be enough to calm the country.
"The government's waning political power has cast doubts over whether Greece will be willing and able to implement the austerity measures demanded by the EC and the IMF in return for their continued support," wrote Capital Economics analyst Jonathan Loynes in a research note.
Meanwhile, the EU's Rehn said a second bailout deal for Greece would be delayed until July.
In other trading Thursday, the British pound fell to $1.6105 from $1.6175 late Wednesday. The dollar rose to 98.66 Canadian cents from 98.15 Canadian cents.
While the greenback was higher against most other currencies around the world Thursday, the Japanese yen and Swiss franc _ both considered safe-haven currencies _ gained against the dollar.
The dollar dipped to 80.78 Japanese yen from 80.97 Japanese yen and fell to 0.8504 Swiss franc from 0.8534 Swiss franc.
Safe-haven currencies tend to rise during times of global turmoil as investors move their money into currencies they view as less risky.