Dollar slumps as investors worry about U.S. budget deficit

Posted on Dec 14, 2010 in AllEconomic News
The U.S. dollar fell broadly against major currencies in late New York trading on Monday as investors worried about U.S. budget deficit due to probable tax cut extension.

Moody’s warned on Monday that it could move a step closer to cutting the U.S. Aaa rating if President Barack Obama’s tax and unemployment benefit package becomes law.

The tax-cut extension plan agreed by President Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the U.S. rating in the coming two years, the ratings agency said.

As the economy appeared to be recovering, investors’focus shifted to U.S. fiscal condition. The likelihood of worsening budget deficit made investors not so confident about the dollar.

The euro was traded above 1.34 against the dollar in mid trading session, and the dollar slumped below 83.50 against the Japanese yen in late trading session.

In late Monday trading, the dollar bought 83.34 yen, comparing with 83.90 late Friday, and the euro rose to 1.3404 dollars from 1. 3232.

The British pound also rose to 1.5871 dollars from 1.5802. The dollar fell from 0.9813 to 0.9678 against Swiss francs, and also fell to 1.0075 Canadian dollars from 1.0089.

Dollar slumps as investors worry about U.S. budget deficit – People’s Daily Online.