Dollar rises to nearly 3-week high against euro

Published April 4, 2012 5:45PM (EDT)

NEW YORK (AP) — A weak Spanish bond auction Wednesday drove the dollar to its highest level against the euro in nearly three weeks.

Spain expected to sell as much as $4.6 billion in debt Wednesday, but it only sold $3.5 billion. That increased fears that Europe's debt crisis is spreading to bigger economies.

The yield on Spain's benchmark 10-year bond shot up to 5.61 percent, a sign that investors are less confident in the country's finances. A month ago, the rate was below 4.9 percent.

The euro rose to $1.3134 Wednesday afternoon from $1.3217 late Tuesday. The euro fell as low as $1.3106 earlier, its lowest point since March 16.

Also helping the dollar was the release Tuesday of the Federal Reserve's minutes from its March meeting. In the minutes, the Fed appeared less likely to launch another round of bond-buying to help the economy.

The Fed has launched two rounds of bond purchases, most recently in August 2010, to lower long-term interest rates and make stocks appear more attractive to investors. Lower interest rates can weigh on a currency by reducing the returns investors get from holding it. Since a third round of bond-buying now seems less likely, investors are buying dollars.

In other trading Wednesday, the dollar rose to $1.5875 from $1.5896 late Tuesday. The dollar rose to 0.9167 Swiss franc from 0.9113 Swiss franc and to 99.62 Canadian cents from 99.19 Canadian cents.

The dollar fell to 82.57 Japanese yen from 82.97 yen.

By Salon Staff

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