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The euro dropped against the dollar amid speculation its advance this week couldn’t be sustained and on concern European leaders may not agree at a summit Dec. 9 on how to handle the region’s debt crisis.
The shared currency was still headed for its first weekly increase in a month versus the greenback after policy makers acted to make more funds available to lenders and on optimism European central banks may funnel loans through the International Monetary Fund to fight the crisis. The dollar rose against most of its major peers today as stocks pared gains.
The euro advanced earlier after two people familiar with the negotiations said the region’s finance ministers gave the go-ahead for work on the IMF plan at a Nov. 29 meeting attended by European Central Bank President Mario Draghi. They declined to be named because talks are at an early stage. The need for a new crisis-containment tool emerged as the effort to boost the region’s 440 billion-euro ($589 billion) rescue fund to 1 trillion euros fell short.
The 17-nation currency erased gains versus the greenback as the Hill newspaper reported conservative U.S. lawmakers in Washington may try to block the plan to channel central-bank loans through the IMF. Senator Tom Coburn said he’s planning legislation that would direct the government to veto an expanded role for the fund, the Washington-based publication said today.
The yen dropped versus most of its major peers as Japanese Finance Minister Jun Azumi said he’ll take action on speculative currency moves. Japan’s currency climbed to a postwar record of 75.35 per dollar on Oct. 31, prompting the nation to intervene in markets for the third time this year to stem gains that endangered an export-led economic recovery. Japan sold 9.09 trillion yen from Oct. 28 to Nov. 28, the Ministry of Finance said this week, the most on a monthly basis in data going back to 1991.
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