Dollar gains in London

The dollar gained against a basket of major currencies on Monday after Russia expressed confidence in the US currency, while concerns about the euro zone economy dented the euro. Speaking on the sidelines of a Group of Eight finance ministers in Italy, Russia's Alexei Kudrin said the dollar's role as the world's main reserve currency is unlikely to change in the near future.
This boosted the dollar, alleviating concerns that major emerging market countries may be diversifying their reserves away from the dollar ahead of a summit of leaders of Brazil, Russia, India and China (BRIC) in Russia on Tuesday. "Markets are pricing in dollar strength after the G8 and before the BRIC summit," UBS currency strategist Geoffrey Yu said. "It looks like the conclusion is that there is no drastic move away from the dollar as the main reserve currency," he added.
The dollar continued to recoup some of its recent sharp falls against the euro and other major currencies, which had benefited as optimism that the global economy was on the road to recovery boosted perceived higher risk assets. The euro was particularly weak on concerns the euro zone economy may be lagging other countries after figures on Monday showed the euro zone lost a record number of jobs in the first quarter.
By 1212 GMT, the dollar had jumped 1 percent against a basket of currencies to 80.947. The euro was 1.2 percent lower against the US currency to $1.3846. It also lost 1.3 percent against the Japanese yen to 136.08 yen. The euro fell on Friday after much weaker-than-expected euro zone industrial production data last week, while a German industry group warned on Monday that tight credit conditions are putting a squeeze on German firms that may hamper a recovery.
Sharp falls in oil prices also weighed on commodity-related currencies. The Australian dollar tumbled 1.4 percent against its US counterpart to $0.8009 while the US dollar rose 1.2 percent against the Canadian dollar to C$1.1322. The comments by Russia's Kudrin followed those last week from the Chinese vice foreign minister that China has no intention of abandoning the dollar.
International Monetary Fund chief Dominique Strauss-Kahn also commented on the currency at the G8 meeting, saying he did not see the dollar as weak and that it "has been today correctly valued by the market". Investors were awaiting a summit of leaders of Brazil, Russia, India and China (BRIC) in the Russian city of Yekaterinburg on Tuesday for any further comments on the issue.