Dollar slips as investors seek bigger returns

AP News
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Posted: Aug 17, 2011 4:33 PM
Dollar slips as investors seek bigger returns

The dollar slid Wednesday as investors, hoping for the return of stronger growth in the third quarter, bet on currencies that could generate bigger returns.

The U.S. has some of the world's lowest interest rates. Higher rates in countries such as Norway and Australia tend to support demand for those currencies when investors feel more confident about a resurgence in global growth.

Tuesday's report of more growth than expected in industrial production helped reassure investors that the U.S. may not see another recession, said Bank of New York Mellon's Michael Woolfolk. Investors are betting that growth in the current quarter will be stronger than the tepid pace of the first half of the year.

In late trading in New York, the euro rose to $1.4451 from $1.4397, earlier briefly touching above $1.45, despite ongoing worries about Europe's debt crisis.

The British pound rose to $1.6566 from $1.6457, while the dollar dropped to 98.05 Canadian cents from 98.30 Canadian cents.

The dollar also fell to 76.48 Japanese yen from 76.78 yen, and dropped to 0.7895 Swiss franc from 0.7938 franc after the Swiss National Bank decided not to peg the franc to the euro as a way of curbing the Swiss currency's rise this year.

The franc strengthened against the euro as well as the dollar.

Last Tuesday, the dollar hit a record low of 0.7062 franc, having dropped more than 30 percent this year. The euro was approaching parity with the franc. That prompted the Swiss central bank to start emergency measures to weaken its currency. A stronger currency can hurt exports.