The U.S. dollar rose against major currencies in late New York trading on Wednesday as Portugal’ s austerity plan might be rejected and Britain cut its economic growth prospect in 2011 and 2012.
It is widely expected that the austerity plan raised by the minority Portuguese government could not be passed in a vote later on Wednesday in the parliament.
Analysts believed that if the voting result meets the expectation, the likelihood of Portugal’s seeking for financial aids from the European Union and the International Monetary Fund to deal with its debt problems will increase.
The vote comes just a day before a two-day summit of European Union leaders which intends to discuss measures to boost economic coordination across the eurozone.
The concerns over Portugal weighed on the euro. The currency fell below 1.42 against the dollar in New York’s trading session on Wednesday.
Meanwhile, The British pound fell against the greenback on Wednesday as Britain cut its economic growth forecasts on Wednesday.
George Osborne, the finance minister of Britain said the economy was projected to grow 1.7 percent in 2011, and 2.5 percent in 2012. In November, growth was estimated to be 2.1 percent this year and 2.6 percent in 2012.
The dollar steadied versus Japanese yen between the range of 80. 80 and 81.00 in Wednesday’s trading session amid investors’ cautions on further intervention and lingering worries about radiation leaks from damaged Japanese nuclear power plants.
In late Tuesday trading, the dollar bought 80.86 yen, comparing with 80.91 late Monday, and the euro fell to 1.4123 dollars from 1. 4207.
The British pound also fell to 1.6246 dollars from 1.6382. The dollar rose from 0.9032 to 0.9081 against Swiss francs, and also rose to 0.9806 Canadian dollars from 0.9793.
The Financial Sector Master Plan (FSMP) Phase II, which is a five-year plan ranging from 2009-2013, will be implemented in 2009. This plan aims to reduce operating costs of financial institutions; increase competition among financial institutions and non-bank entities through expanding the business scope permitted banks and greater foreign participation; and improve market architecture with the development of limited deposit insurance and greater variety in risk-management instruments.
The new plan allows greater competition in the banking industry. The plan would strengthen the banking system by lowering the NPL ratio to less than 2 percent in 5 years (2013). The global economic slowdown and domestic political unrest will weigh upon growth in Thailand. Exports of services, of which more than half are tourism receipts, have also been severely affected by the political unrest since October.