Euro Falls Sharply vs Dollar on Bank Worries

Sunday, Sept 29, 2008

The euro fell nearly 2 percent against the dollar on Monday as the financial crisis spread further outside the United States, while the dollar rallied as the proposed $700 billion bailout deal looked set for approval.

Worries about the European financial sector mounted after the Belgian, Dutch and Luxembourg governments nationalized parts of banking and insurance group Fortis and agreed to inject 11.2 billion euros into the financial group.

Meanwhile, troubles at UK bankBradford & Bingley have led the UK government to nationalize its lending activities, while the retail branches and deposits have been sold to Spanish bank Santander.

The news sent the euro and the pound tumbling against the dollar, which was supported by news that the U.S. Congress was close to agreeing a $700 billion deal to bail out the financial sector.

"The U.S. reaction to a systemic problem has been a systemic solution, whereas elsewhere it's been on a case-by-case basis," said Daragh Maher, currency analyst at Calyon.

Full article here


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