Dollar buckles under bailout's fiscal weight
Surging crude oil, Wall Street weakness also sink greenbackBy Lisa Twaronite & Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) -- Surging oil futures and worries about the costs of a U.S. financial rescue weighed on the dollar Monday, which plummeted as markets wrestled with the implications of the U.S. government potentially taking on $700 billion to respond to the credit crisis.
"Rather than stabilizing or calming the markets, the destruction of the U.S. balance sheet has triggered the largest drop in the U.S. dollar against the euro since its inception in 1999 and the largest single-day rise in oil prices since 1984," said Kathy Lien, director of currency research at GFT.
Crude bolted to $130 a barrel as it scored its biggest daily gain in dollar terms since 1984, when it began trading on the New York Mercantile Exchange. October crude rose $16.37, or 15.7%, to close at $120.92 per barrel. See Futures Movers.
Oil is traded in dollars, so a move in one typically fuels an inverse move in the other.
Weakness on Wall Street also sapped dollar sentiment, with all three major indexes ending with losses more than 3%. See Market Snapshot.
The dollar index, a measure of the greenback against a trade-weighted basket of six major currencies, fell as low as 75.890. It was last at 76.133, compared with 77.663 late Friday in North American trading.
The euro soared to a session high of $1.4865, up sharply from $1.4488 late Friday. It was last buying $1.4804. .......(more)
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