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Tuesday, January 24, 2012

Dollar Strengthens as Greek Debt-Discussion Stalemate Spurs Safety Demand

The dollar rose, reaching the highest level this year against the yen, as European policy makers and Greek bondholders failed to reach an agreement on a debt-swap plan for the indebted nation, spurring safety demand.

The yen fell against 12 of 16 major peers tracked by Bloomberg after the Bank of Japan cut its economic growth forecast for next year. The euro reached the highest level in almost four weeks against the yen earlier after a report showed European services and manufacturing industries unexpectedly expanded in January. The pound rose against most peers after a report showed the budget deficit shrank in December more than predicted.

“We’re getting a broad dollar rally across the board on a little bit of risk aversion,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “Europe’s PMI data was much more positive than the market thought. That’s giving the broader growth scenario a boost, but the beneficiary right now is the dollar because the euro is down over this issue of Greek private sector investment.”

The dollar rose 0.9 percent to 77.73 yen at 9:36 a.m. in New York and touched 77.82, the highest level since Dec. 29. The greenback appreciated 0.4 percent to $1.2961 per euro. The common currency rose 0.5 percent to 100.79 yen.

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