Safe-haven flows ease on waning Dubai concerns

Tuesday, December 1, 2009

The US Dollar gingerly retreated from recent gains, after comments from the United Arab Emirates soothed loan default concerns, taking away for now, the flow of safe-haven funds.

The UAE’s Central Bank said on Monday that it would back the banks in Dubai after Dubai World, a private equity company, said it would need until the middle of 2010 to restart payments on its 59 Billion Dollars in debt accrued during the vast and elaborate expansion of Dubai’s infrastructure.

An interest payment of 3.5 Billion that was expected to be paid in December was the first payment to be affected by the declaration.

Some of the losses were stemmed by the Dollar however, and trends were indicating a continued upswing after a senior Dubai financial official was quoted as saying that the “Government of Dubai does not guarantee Dubai World debt” leading investors to question the Central Banks comments.

At 10:45 GMT, the US Dollar was trading down .15% to the Euro to 1.5008, up .03% to the Japanese Yen to 86.54, up .2% to the British Pound to 1.647, down .35% against the Canadian Dollar to 1.058, down .78% versus the Australian Dollar to .9131 and down .2% against the Swiss Franc to 1.0039. The ICE Dollar Future Index was trading at 74.70, close to the 15 month low it reached early last week of 74.170


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