US dollar weakens on subprime fears

Sterling added 0.5 percent higher versus the greenback just on Friday, to a new 26-year high of $2.0587, taking its gain on the week to 1.2 percent, while it gained 0.4 percent against the yen this week to ¥249.31 and was 0.7 percent higher to £0.6724 against the euro as UK inflation didn’t seem like it would peak in the near future.

New inflation data and figures on growth that were stronger than expected again raised the possibility that UK interest rates could not be quite done advancing yet.

Meanwhile, the US dollar weakened as a result of continuing difficulties in the subprime mortgage sector as well as continuing prospects that the US interest rate isn‘t going anywhere - either up or down - anytime soon.

As a result, the greenback dropped 0.2 percent to ¥121.21 in relation to the yen, while it lost 0.4 percent to $1.3835 to the euro over the week.

The Turkish lira was also weaker Friday after its strong gains on Thursday ahead of a general election in Turkey this weekend with a decline of 0.3 percent on the day with most analysts inclined to believe that more weakening is to come.

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