The euro fell a second day against the dollar as France and Belgium led
a state-backed rescue of Dexia SA, the world's biggest lender to local
governments.
The 15-nation currency also weakened against the British pound after
Belgian Prime Minister Yves Leterme said Dexia will receive about $9.2
billion to shore up its capital. The dollar rose against the yen on
speculation the U.S. Senate will salvage a $700 billion bank-bailout
plan as early as tomorrow after Congress rejected it yesterday. The yen
dropped against 14 of the 16 most active currencies as European stocks
rose, reviving purchases of higher-yielding currencies funded in Japan.
Dexia is being rescued after its shares had a record decline yesterday.
The capital infusion comes two days after Belgium, the Netherlands and
Luxembourg rescued Fortis, the largest Belgian financial-services
company, Britain took control of Bradford & Bingley Plc, the
country's biggest lender to landlords, and Germany bailed out Hypo Real
Estate Holding AG.
``Although the U.S. is at the center of all the problems going on in
the markets, rather counter-intuitively the dollar is coming out of it
a winner,'' said Adam Cole, head of global currency strategy in London
at RBC Capital Markets.
``I would be very cautious in betting on further near-term dollar-yen
losses,'' said Michael Klawitter, a currency strategist at Dresdner
Kleinwort in Frankfurt. ``Any positive news on the political front
would have quite an impact.''