Dollar falls on u.s. Debt impasse safety bid

The dollar slid toward a record low against the Swiss franc after U.S. lawmakers failed to agree on raising the nation’s $14.3 trillion debt ceiling, boosting the odds of a default as soon as next week.

The franc and yen rose against most of their major peers as Republicans prepared to force action on a shorter-term extension of the debt limit than President Barack Obama has requested, spurring demand for the currencies as havens. Gains in the yen were limited on speculation Japan will intervene in markets to stop its appreciation. The euro was little changed, paring an earlier advance, after Moody’s Investors Service cut Greece’s sovereign credit rating.

“The main driver is concern over whether the U.S. authorities will eventually reach an agreement over raising the debt ceiling,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The main beneficiaries would be the Swiss franc and the yen. The dollar may continue to underperform because there’s a risk that financial instability will pick up as the week progresses and we get closer to the deadline."

The dollar fell 1.2 percent to 80.92 Swiss centimes as of 7:40 a.m. in London. It reached a record low 80.33 centimes on July 18. The greenback fetched 78.39 yen from 78.54 after touching 78.12 yen, the least since March 17. The U.S. currency traded at $1.4377 versus the euro from $1.4360 last week. The yen was little changed at 112.62 per euro.

Source: Bloomberg Business Week