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Dubai Bailout means Dollar Falls

Dubai Bailout means Dollar Falls

Investors welcomed news that Abu Dhabi will bail out ailing Dubai with funds of around $10 billion.  In fact, the announcement led to higher risk-taking amongst currency traders, meaning the US dollar slipped on Monday.

Last week, strong US economic figures meant that the dollar enjoyed a boost yet today has so far been all about risky business, both for assets and currencies.

The Dollar index was down to 76.417 .DXY by midday GMT, a decline of 0.2 per cent.  Meanwhile, the euro was up by the same percentage (0.2 per cent) to $1.4650.

Yet the euro’s gains were dampened on economic problems in Euro countries – Greece had its credit rating slashed last week.  Therefore, problems in Dubai only served to highlight the issues within Europe.

State-owned conglomerate Dubai World announced last month that it need an extension to pay back billions of dollars worth of debts.  The news sent world markets tumbling, not least in the UK where many investment banks have heavy stocks in Dubai.

Today, London shares also took a strong boost based on the Dubai news.