Dollar Drops on Speculation it is worth Less than Thought

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Dollar Drops on Speculation it is worth Less than ThoughtThe dollar dropped from its strongest level in at least five years on bets the currency may be overvalued. The currency plunged 0.3 percent to trade at 118.29 yen after earlier hitting 119.14 yen, the highest level since August 2007. The dollar also fell 0.2 percent to $1.2480 per euro.

“The dollar’s broad outperformance this year leaves it vulnerable to profit-taking as the year comes to a close,” Joe Manimbo, a Washington-based market analyst at Western Union Business Solutions, told Bloomberg News. “Underlying fundamentals remain positive and should continue to support it through at least the early stages of next year.”

The Russian ruble led losses of currencies of oil-producing nations as crude oil prices fell. The ruble dropped 2.8 percent to trade at 51.8120 per dollar, and touched a record-low of 53.95. The prices of the West Texas Intermediate touched $63.72 per barrel in New York, the weakest level since July 2009, before easing to $67.53.

The Nigeria’s naira fell to 184.51 against the dollar, while the Australia’s dollar dropped to a four-year low of 84.17 U.S. cents. The Malaysia’s ringgit registered its biggest two-day depreciation since the Asian financial crisis of 1997-98 to 3.4392 per dollar.

The Norwegian krona surged the most of all dollar’s 31 major peers after a manufacturing gauge increased to 51.3 in November, up from October’s reading of 50.8. The currency advanced 1.1 percent to trade at 6.9514 per U.S. dollar after dropping for three successive months.

The pound also rose, appreciating 0.5 percent to $1.5721 after U.K. factory activity beat expectations by expanding the most in four months. This followed a report by Markit Economics that the U.K. Purchasing Managers’ gauge increased to 53.5, up from October’s reading of 53.3. Analysts had expected a figure of 53. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com