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Dollar strengthens against euro

SINGAPORE, Jan 3, 2011 – The dollar strengthened against the euro and held firm against the yen in Asian trade on Monday as traders backed the greenback, analysts said.

A euro bought 1.3301 US dollars, down from 1.3381 in New York on Friday. The European currency was changing hands at 108.10 yen from 108.32.

The dollar was at 81.27 yen from 81.28 in the United States on Friday.

Investors were selling the euro and buying the dollar on the first trading day of 2011 as they reaped profits from a three-day surge in the European currency, analysts said.

"There was a very strong three-day rally in the euro and it\’s quite normal to have short-covering," said Philip Wee, senior currency economist for DBS Group Research in Singapore.

The euro gained ground against the greenback in the last three days of 2010, driven partly by investors short-selling the dollar for the European currency.

Traders were also eyeing US Federal Reserve chairman Ben Bernanke\’s testimony on the US economic outlook to the Senate Budget Committee on Friday, Wee told AFP.

The greenback was lower against most Asian currencies, with the US dollar trading at 1.2855 Singapore dollars from 1.2860 dollars on Friday and 43.75 Philippine pesos from 43.77.

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It also bought 29.11 Taiwan dollars from 29.14 on New Year\’s Eve.

However, the US dollar strengthened against the Thai and Indonesian currencies, changing hands at 30.08 Thai baht from 30.06 on Friday and 9,000.00 rupiah from 8,990.00.

Markets in Japan, China, New Zealand and Thailand were closed on Monday for public holidays.

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