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The dollar dropped against most of its major counterparts as China’s interest-rate increases failed to quell investors’ appetite for higher-yielding assets.
The benchmark one-year lending rate will increase to 6.06% from 5.81%, effective tomorrow, the People’s Bank of China said on its website today. The one- year deposit rate will rise to 3%, from 2.75%.
“The move by the Chinese was fairly expected, and the currency market is pretty unfazed and is taking it in stride so far,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “The euro is up from yesterday as you’re seeing a calmer situation in Egypt, and that’s certainly helping the euro. The overall global situation is better.”
Higher consumer spending, along with business investment in equipment and software, point to U.S. growth this year of “pretty close to 4%,” Lacker said today in a speech in Newark, Delaware.
Fed Chairman Ben S. Bernanke testifies tomorrow at a hearing of the House Budget Committee.
Sterling dropped after the U.K. increased a levy on bank balance sheets.
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