LONDON, 27 January 2005 — The dollar wilted against the euro here yesterday on positive economic data from Germany while the yen got a boost after a Chinese said official said the country’s finance minister would discuss Chinese exchange rates at a G-7 meeting next month. The single European currency in late-day trade was at 1.3075 dollars after 1.2972 late Tuesday in New York. The dollar fell to 102.95 yen from 104.07 on Tuesday.
The yen rose as the market responded to perceptions that the peg, which has fixed the Chinese currency at around 8.28 to the US dollar for the past decade, could be up for discussion. Manufacturers and politicians in the United States have long complained that the yuan is undervalued by as much as 40 percent, giving Chinese exporters an unfair advantage.
The euro, meanwhile, moved higher against the dollar after Germany’s Ifo institute said its German business climate index rose to 96.4 in January from 96.2 in December, slightly better than expectations and a marked improvement on some of the rumors in the market ahead of the data.
The euro was changing hands at 1.3075 dollars against 1.2972 late on Tuesday in New York, 134.63 yen (135.02), 0.6945 pounds (0.6957) and 1.5474 Swiss francs (1.5475). The dollar stood at 102.95 yen (104.07) and 1.1833 Swiss francs (1.1929). The pound was at 1.8826 dollars (1.8639), 193.83 yen (193.95) and 2.2328 Swiss francs (2.2252).
US stocks rose as positive company earnings helped extend the previous session’s rally and the three major indexes tried to post two consecutive days of gains for only the second time this year. The Dow Jones industrial average was up 30.01 points, or 0.29 percent, at 10,491.57. The Standard & Poor’s 500 Index was up 3.24 points, or 0.28 percent, at 1,171.65. The technology-laced NASDAQ Composite Index was up 11.07 points, or 0.55 percent, at 2,031.02.
Asian stock markets closed mostly higher yesterday as sentiment got a welcome boost after sharp gains on Wall Street ended a four-day losing streak there, dealers said. They said investors clearly hoped that the New York pick-up signaled the end of the weak start to 2005 but opinion remained divided, with many preferring caution given the disappointment so far. The problem was that corporate guidance, especially in the key electronics sector, has been tentative after a poor fourth quarter while some of the majors, such as consumer products giant Sony, have even issued profit warnings.