LONDON/DUBAI, 16 March 2006 — The dollar wobbled against the euro in London yesterday after a US Treasury report revealed that US capital inflows in January were insufficient to cover the huge US trade deficit for that month.
The single European currency was at 1.2045 dollars after 1.2010 late Tuesday in New York. The dollar was meanwhile trading at 117.33 yen, down from 117.58 on Tuesday.
The euro was changing hands at 1.2045 dollars against 1.2010 late on Tuesday, 141.31 yen (141.24), 0.6898 pounds (0.6876) and 1.5659 Swiss francs (1.5647).
The dollar stood at 117.33 yen (117.58) and 1.3000 Swiss francs (1.3025).
Earlier declines in the Saudi bourse had sparked widespread selling throughout the Middle East, dragging down bourses from Lebanon to Qatar yesterday.
The Tadawul All-Share Index (TASI), which was down by nearly its 5 percent limit in morning trade, however leapt more 4.74 percent to close at 15,606.38 points.
The Kuwaiti market, the Arab world’s second largest, fell for a fourth straight day yesterday, as a five-week wave of unabated selling dragged the share index to close below 10,000 points for the first time since September.
Dubai’s index fell yesterday below the 600-point level for the first time since April, after dropping nearly 12 percent the previous day as initial public offerings (IPOs) exacerbated selling trends. “The psychological shock that investors went through yesterday, they haven’t recovered from it. It needs a few more sessions,” said Mohammed Yasin of Emirates Securities in Dubai. “I believe we had some institutional buying in the morning, but it weakened by the end of the day,” he added.
Qatar shed 4.41 percent yesterday, Bahrain was down 1.62 percent, and Oman fell 2.75 percent. “It’s a continuation of the regional pattern we are seeing across the board in the GCC and MENA regions,” said Fadhel Makhlooq of SICO Investment Bank in Bahrain.
Tuesday’s panic selling in the Gulf also affected other Middle Eastern markets. Egypt bounced back yesterday, with the Hermes up 5.01 percent to 55,321.05 points. The broader CIBC index rose 3.51 percent to 219.88 points.
Lebanon’s benchmark BLOM Stock Index fell 3.08 percent to 1,607.47 points. “The reason for the decline can’t be anything but the fall in the Gulf Arab markets,” said one senior trader in Beirut.
European stock exchanges advanced yesterday, with the London FTSE 100 index gaining 0.24 percent to close at 5,965.1. In Paris the CAC 40 rose by 0.21 percent to 5,127.93 and in Frankfurt the DAX added 0.47 percent to close at 5,898.48.
In New York, the Dow Jones Industrial Average, which closed at its highest point since June 2001 on Tuesday, edged up 3.76 points (0.03 percent) to 11,155.10 at 1640 GMT.
The NASDAQ composite dipped a fractional 0.15 point (0.01 percent) to 2,295.75 while the broad-market Standard and Poor’s 500 index — which also hit its highest point in nearly five years Tuesday — fell 1.29 points (0.10 percent) to 1,296.19.
Asian stocks closed mostly higher yesterday. In Tokyo, the Nikkei-225 index rose 80.68 points to 16,319.04.
