Dollar continues to rally on fears about Greece

AP News
Posted: May 16, 2012 5:27 PM
Dollar continues to rally on fears about Greece

Worries that Greece will drop out of the euro currency union continued to push the dollar higher against most other currencies Wednesday.

The dollar has been rallying this month as conditions in Europe deteriorate and traders seek the safety of the U.S. currency. The dollar index, which compares the dollar against six other currencies, is up 3.4 percent since April 30 and hit a four-month high on Wednesday.

During elections in early May, Greek voters gave support to anti-austerity parties. Since then, Greek politicians have failed to create a new government, forcing the country to hold a new election next month. Traders are worried that if those parties win in June the country may drop out of euro zone, which could hurt the euro's credibility.

With Greece's political future still uncertain, traders are more comfortable holding the dollar, says Geoffrey Yu, currency strategist at UBS in London. The dollar is considered a safer bet during times of international turmoil.

The euro fell to $1.2725 in late trading Wednesday from $1.2734 late Tuesday. Earlier, the euro fell to $1.268, a four-month low against the dollar.

The British pound fell to $1.5917 from $1.6003. The dollar rose to 80.29 Japanese yen from 80.27 Japanese yen, to 0.9437 Swiss franc from 0.9432 Swiss franc and to 1.0112 Canadian dollar from 1.0047 Canadian dollar.