Fears of European debt crisis send dollar higher

AP News
Posted: Jan 30, 2012 4:06 PM
Fears of European debt crisis send dollar higher

The dollar rose Monday because of renewed worries over the Greek debt crisis, despite a tentative deal between Greece and the investors who bought its national bonds.

The euro had gained ground over the past two weeks as investors looked ahead to a deal between Greece and its bondholders that would cut Greece's debt and secure much-needed bailout money.

But the deal isn't done. A Greek default would sting the European economy and perhaps trigger defaults in other European countries. Portugal's borrowing costs were already jumping.

Investors are worried that Europe faces a deep recession even if Greece gets the money it needs to avoid default. European leaders meeting in Brussels on Monday promised to try to boost economic growth for the countries in the European Union.

European countries have slashed spending and put in place other unpopular economic reforms to ease concerns of investors who buy their bonds and allow them to cover budget deficits. But unemployment has risen across Europe, increasing fears of a prolonged downturn.

The euro fell to $1.3124 in late trading Monday from $1.3208 late Friday. It was worth almost $1.50 in May.

In other trading, the British pound fell to $1.5697 from $1.5724, while the dollar dropped to 76.29 Japanese yen from 76.72 yen.

The dollar also rose to 0.9185 Swiss franc from 0.9129 franc, but was nearly unchanged at 1.0025 Canadian dollar from 1.0012 Canadian dollar.