By Carla Mozee, MarketWatch , Hiroyuki KachiWeak oil prices are
a boost to the U.S. economy: analyst
LONDON (MarketWatch) -- The Russian ruble dropped to a new
all-time low against the U.S. dollar on Friday while other
oil-related currencies also got crushed a day after the
Organization of the Petroleum Exporting Countries did nothing to
alleviate an oil glut.
Russia's currency (USDRUB) on Friday traded at 49.965 against
the greenback, its weakest level ever. The dollar bought 48.795
rubles late Thursday.
The ruble's fresh descent came as the U.S. dollar enjoyed
another round of broad gains against currencies from oil-producing
countries including Norway and Canada. Oil futures plunged, with
the January Nymex contract (CLF5) dropping more than 10% to end at
$66.15 a barrel.
The dollar bought 7.0215 Norwegian krone (USDNOK) versus 6.939
krone late Thursday, marking its strongest level versus the
Norwegian currency since March 2009. The krone's weakness came even
as Norway's unemployment rate fell to 2.6% in November and retail
sales grew 0.6% in October, noted Charalambos Pissouros, senior
technical analyst at IronFX, on Friday. 3
"[Following OPEC's decision to maintain its current output, the
ongoing fall in oil prices is likely to keep NOK under selling
pressure and the Norges Bank will probably remain on hold for
longer than it would have otherwise," wrote Pissouros.
The dollar rose 0.7% versus the Canadian dollar (USDCAD) to
fetch C$1.1426
Meanwhile. the Bank of Russia on Friday said it's extending
limits on currency swaps for the next two weeks in a move to
discourage bets on a weaker ruble.
"When you combine the fundamentals that Russia is facing right
now," in the form of Western sanctions and the further fall in oil
prices, "it's going to limit how much [the central bank] can
improve the value of the ruble," said Jameel Ahmad, chief market
analyst at FXTM.
The euro (EURUSD) fell 0.1% versus the dollar to $1.2443, while
the ICE dollar index (DXY) , a measure of the U.S. unit against a
basket of six major rivals, rose 0.8% to 88.337.
As for Japan, the dollar strengthened against the yen, with
lower oil prices among the factors accelerating the selling of the
Japanese currency.
The dollar (USDJPY) was at Yen118.66, up from Yen117.74 late
Thursday in New York.
A fall in Japan's two-year, government-bond yield into negative
territory for the first time ever, provided another catalyst for
the dollar's strength against the yen. Expectations for a widening
gap between U.S. and Japanese interest rates has been one of the
drivers of the yen's decline against the greenback.
"I think the negative yield on the two-year note can be cited as
one reason behind the yen weakness," said Akito Fukunaga director
of bond research at Barclays in Tokyo.
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