New York - Arabstoday
The dollar climbed from record lows against the Swiss franc and three-week troughs versus the euro Wednesday as investors trimmed bearish bets on the greenback given no fresh news on negotiations to raise the US debt ceiling. Analysts though expected the dollar\'s rally to be short-lived as its outlook remained downbeat whether or not the US government\'s borrowing limit is increased. Most market participants believed the deficit reduction proposals being discussed in Congress fall short of the required budget cuts necessary to avert a US debt downgrade by ratings agencies. \"We\'re still waiting to see what\'s going to happen in the US debt situation, but we didn\'t really get any new news on the debt negotiations,\" said Steven Butler, director of foreign exchange trading at Scotia Capital in Toronto. \"The dollar has bounced back a little bit so we need fresh inspiration to sell the dollar.\" Article continues below While everybody in the market expects Congress to strike a debt agreement, a ratings downgrade seemed more than likely. Analysts polled by Reuters expect the United States will probably lose its AAA credit rating from at least one major rating agency and believe the wrangling over the debt ceiling has already damaged the economy. As such, the dollar remained a sell on any rally, traders said. In early New York trading, the dollar was little changed versus the Swiss franc, after earlier hitting a fresh record low of 0.79960 on the EBS trading platform. The dollar has fallen roughly 4.6 per cent so far in July against the Swiss franc and was down for a sixth straight month. Traditional safe-haven, the Swiss franc has been the main beneficiary of the latest dollar sell-off and traders said the dollar could fall as low as 0.7600 franc in the near term. Analysts said the Swiss National Bank was unlikely to enter the market to weaken its currency despite its elevated levels. Gains in the dollar were also helped by the euro\'s losses. The euro came off a three-week high on concerns a new Greek bailout plan agreed last week may not be sufficient to prevent contagion from the debt crisis to other larger Eurozone economies. However, the single Eurozone currency remained only a cent below the early July high around $1.4577. The euro was down 0.3 per cent at $1.44660, having earlier climbed to $1.45370. Traders cited offers in the $1.45500 to $1.45800 area and bids layered into $1.44500. Support for dollar India\'s central bank is believed to have intervened in the foreign-exchange market Wednesday to support the US dollar against the rupee, Dow Jones Newswires reported, quoting traders. The reported move follows several suspected interventions by Asian central banks to brake a global fall in the dollar as the risk of US default grows because of political deadlock in Washington over the country\'s debt ceiling. The Reserve Bank of India is believed to have bought the dollar at around Rs43.85 to the US currency, according to three traders quoted by Dow Jones, who asked not to be named. The size of the intervention was not immediately clear, the news agency said. But one of the traders said the Reserve Bank was likely to have bought at least $200 million to help reduce the rupee\'s volatility.