Oct. 11 (Bloomberg) -- The euro remained stronger against the majority of its most-traded counterparts as lawmakers in Slovakia, the only member of the euro area that hasn’t ratified a retooled bailout fund, may pass it this week.
The 17-nation currency pared gains against the dollar as Slovakia’s largest opposition party rejected the measure in a first vote that toppled the government. Finance Minister Ivan Miklos said the revamped fund will likely be passed in a separate vote later this week. The pound weakened as U.K. manufacturing production contracted for a third month. New Zealand’s dollar fell as the nation’s budget deficit was wider than forecast.
“The foreign-exchange market is really just waiting on Slovakia to decide one way or the other,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network. “The euro’s downside is being protected by the expectations that the leaders of France and Germany have some sort of grand plan to bring the bloc’s debt crisis closer to a solution, so that’s helping.”
The euro was little changed at $1.3640 at 5 p.m. in New York after sliding 0.6 percent earlier today and climbing 2 percent yesterday in the biggest gain since July 2010. The shared currency reached $1.3699 yesterday, the highest level since Sept. 21. The euro unchanged at 104.58 yen. The dollar was unchanged at 76.65 yen.
Smer, the largest opposition party, which didn’t back the legislation today, will support the changes in a second vote, ensuring it will pass, party leader Robert Fico told reporters in the capital Bratislava. No date has been set for a new vote.
Kenya’s shilling led declines against the dollar among all of the currencies tracked by Bloomberg, falling 2.5 percent to 106.15 and extending its drop this year to 24 percent. It slid earlier today to 106.75, the weakest on record.
Inflation in the African nation accelerated to 17.3 percent last month, more than triple the government’s 5 percent target. Kenya’s government announced plans today to help stabilize the shilling by boosting domestic food production to curb imports.
Sterling fell for the first time in three days versus the dollar, dropping 0.6 percent to $1.5577 after a report showed Britain’s manufacturing dropped in August more than forecast.
Factory output decreased 0.3 percent from July, when it slid a revised 0.2 percent, the Office for National Statistics said. The median forecast of 24 economists in a Bloomberg News survey was for a drop of 0.2 percent. Overall industrial output, which includes mining and oil and gas, rose 0.2 percent.
Developing Market Currencies
The New Zealand dollar slid 0.5 percent to 77.98 U.S. cents after government financial statements showed the budget deficit widened to a record NZ$18.4 billion ($14 billion) in the year through June, from a NZ$16.7 billion estimate in the May budget.
South Korea’s won was the second-best performer against the dollar among the most-traded currencies, after Norway’s krone, rising as much as 0.9 percent to a two-week high of 1,160.80.
More than $300 billion of foreign-exchange reserves will help the nation weather market volatility, the Dong-A Ilbo newspaper reported, citing Benjamin Hung, chief executive officer of Standard Chartered Plc’s Hong Kong unit.
The Norwegian krone strengthened 0.3 percent to 5.6942 to the greenback.
The Dollar Index was little changed at 77.656 after yesterday’s 1.4 percent decline, the biggest loss on a closing basis since July 13. IntercontinentalExchange Inc.’s gauge, used to track the greenback against the currencies of six major U.S. trading partners, is weighted 57.6 percent to the euro.
The Standard & Poor’s 500 Index was little changed after dropping 0.6 percent earlier today and rallying 3.4 percent yesterday. The S&P GSCI Total Return Index of 24 commodities advanced for a fifth day, rising 0.9 percent.
“The euro is in a waiting game for Slovakia,” said Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York. “Stocks are holding on to their gains from yesterday after the German-French promise to deliver this comprehensive plan gave the market the impression that European policy makers are finally getting it.”
European Union and International Monetary Fund officials indicated today that Greece will get an 8 billion-euro ($11 billion) loan next month under a 110 billion-euro bailout.
Two days ago, Germany’s Chancellor Angela Merkel and France’s President Nicolas Sarkozy set the Nov. 3 meeting of the Group of 20 as a deadline for a breakthrough in handling Europe’s debt crisis.
“The agreement between Merkel and Sarkozy over the weekend caused a short-term relief rally in the euro, and we’re treading water now,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets under administration. “It’s still doubtful that the euro can maintain its recent gains.”
--With assistance from Emma Charlton in London and Eric Ombok in Nairobi, Kenya. Editors: Greg Storey, Dave Liedtka
To contact the reporter on this story: Allison Bennett in New York at email@example.com
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org