Nov. 20 (Bloomberg) -- The dollar fell in New York against the euro, yen, British pound and Swiss franc after a series of explosions in Istanbul heightened concern about terrorism and the prospect of more attacks against the U.S. and its allies. Comments by French Finance Minister Francis Mer earlier that indicated he is unconcerned about the slide in the U.S currency, which has dropped 12 percent against the euro this year, exacerbated the drop. As of 8:39 a.m., the dollar had weakened to $1.1930 per euro from $1.1878 late yesterday. It fell to 108.87 yen from 109.32. ``Any type of terrorist activity will negatively impact U.S. growth, leading to lower returns on U.S. assets,'' said Alejandro Urbina, a currency strategist in Chicago at Bank One Corp. who used to work at the Federal Reserve Bank of Chicago. The blasts in the Turkish city killed at least 15 people, NTV reported. Two suicide bombers killed 23 people in Istanbul on Saturday. The dollar fell against 12 of 16 major currencies tracked by Bloomberg. The attacks today have ``all the hallmarks of the international terrorism practiced by al-Qaeda,'' U.K. Foreign Secretary Jack Straw told reporters in London, where U.S. President George W. Bush is visiting. ``Investors are not prepared to hold U.S. assets,'' said Tony Dolphin, who helps manage $32 billion at Henderson Global Investors in London. ``When you get news like this of attacks, investors are inclined to run away from the dollar.''
`Too Weak'
Gold rose, as did the Swiss franc, which strengthened to as high as 1.2984 per dollar from about 1.3050 before the explosions. Investors typically view the Swiss currency as a refuge during times of political turmoil. The pound rose to $1.7030 from $1.6994 prior to the blasts. Mer said France's economy, Europe's third-largest, is growing fast enough to make up for a drop in exports caused by the euro's advance, and Japan's Nikkei 225 Stock Average had its biggest gain in more than two weeks. ``The issue of the dollar being too weak is of secondary importance compared with the economic recovery,'' Mer said in an interview with French television channel LCI.
Germany's biggest increase in exports in almost three years and a recovery in French consumer spending helped the two largest of the dozen euro economies return to growth, government reports today showed. Europe's $8 trillion economy grew 0.4 percent in the third quarter from the second, the fastest pace in five quarters, rebounding from a contraction in the second quarter, the European Union's statistics office estimated last week. Japan's Cabinet Office today raised its evaluation of the economy as a rebound in the U.S., Europe and Asia spurs exports and business spending, helping sustain seven quarters of growth in the world's second-biggest economy, the government said in its monthly economic assessment released in Tokyo.
China May Retaliate
The dollar may weaken further. China, the third-biggest international investor in Treasuries, may sell some of its holdings because of U.S. restrictions on trade, pushing down the dollar, according to research by Royal Bank of Canada. The U.S. needs about $1.5 billion a day in overseas investment to fund the gap in its current account, the widest measure of international trade. ``News that China may retaliate over tariffs'' on Chinese textiles ``is euro-positive,'' said Adam Myers, a currency strategist in London at Westpac Banking Corp. ``Lots of thing are lining up on the radar screen to suggest the euro will go higher.'' Japan's central bank sold yen yesterday after it reached 107.56 per dollar, the strongest since November 2000, said a currency trader who deals with the BOJ and spoke on condition he not be identified.
`Little Doubt'
The Bank of Japan sold 1 trillion yen ($9.15 billion), Nikkei English News reported, without saying where it got the information. An official at the Ministry of Finance, which instructs the BOJ to buy and sell, declined to comment. ``There seems little doubt the official sector is patrolling the waters under 108 yen,'' said Johnathan Bayley, a currency strategist in Wellington at Westpac Banking Corp. The dollar remained lower even after a government report showed U.S. initial jobless claims last week declined to a level that's close to a three-year low. The less-volatile four-week average dropped to the lowest since February 2001, suggesting a growing reluctance to fire workers as the economy strengthens. ``The focus this morning is on the blasts in Turkey,' 'said Bank One's Urbina. At noon, the Federal Reserve Bank of Philadelphia may report its regional manufacturing index showed growth for a sixth straight month, according to a separate survey of economists. The index probably registered at 25 for November after 28 in October. Readings greater than zero indicate expansion; the October index was the highest since July 1996. //www.bloomberg.com