The US dollar rose on Monday against the euro and yen despite persistent concerns over the troubled American banking system.
The euro dipped to 1.2692 dollars as at 2200 GMT in New York trading from Friday's close of 1.2824 dollars.
The dollar also advanced to 94.58 yen from 93.29.
The greenback was lower in early trading on markets concerns of possible nationalisation of leading American banks amid speculations that Citigroup could be the primary candidate for takeover by the government.
But a statement from the US Treasury Department that the government would seek to avoid nationalisation of troubled banks under a new capital aid programme to be launched on Wednesday sent the dollar rising again even if nationalisation concerns persisted, analysts said.
"The initial reaction to nationalisation may continue to prove dollar negative, but we find the argument ... dubious at best," said Boris Schlossberg, director of currency research at Global Forex Trading.
"Under nationalisation, Citi equity and bondholders would be the ones to suffer the most, while the US taxpayer could in fact profit in the long run if the US government were to pick up all of Citi's global infrastructure at pennies on the dollar and then recapitalise that asset ultimately creating value," he said.
The euro was also weak due to worries over the European financial sector's own problems, offsetting the dollar negative news, Schlossberg said.
Comments by several European Central Bank officials that additional interest rates cuts were likely also kept the euro under pressure.
John Sylvia of PNC bank said further weighing on the euro were concerns over the troubled economies of Eastern Europe, which were largely financed by loans from Western European banks.
Amid a global recession, the booming Eastern European economies have seen a dramatic drop off in demand for their goods, dampening their cash flow and possible repayment of their foreign currency loans, he said.
"If the rising default rate of these foreign currency loans continues, the Western European countries may be forced to further bailout their respective eurozone banks," Sylvia said.
"Such a prospect would surely lead to further downgrades of Western European countries, continuing to pressure the euro lower."
In late New York trading, the dollar rose to 1.1685 Swiss francs from 1.1563 on Friday.
The pound was up slightly to 1.4485 from 1.4421 on speculation of improvements within Britain's financial sector, said Kathy Lien of Global Forex Trading.
"Some banks are showing efforts in the purification of their finances as to improve their positions once economic conditions rebound," she said.
The euro dipped to 1.2692 dollars as at 2200 GMT in New York trading from Friday's close of 1.2824 dollars.
The dollar also advanced to 94.58 yen from 93.29.
The greenback was lower in early trading on markets concerns of possible nationalisation of leading American banks amid speculations that Citigroup could be the primary candidate for takeover by the government.
But a statement from the US Treasury Department that the government would seek to avoid nationalisation of troubled banks under a new capital aid programme to be launched on Wednesday sent the dollar rising again even if nationalisation concerns persisted, analysts said.
"The initial reaction to nationalisation may continue to prove dollar negative, but we find the argument ... dubious at best," said Boris Schlossberg, director of currency research at Global Forex Trading.
"Under nationalisation, Citi equity and bondholders would be the ones to suffer the most, while the US taxpayer could in fact profit in the long run if the US government were to pick up all of Citi's global infrastructure at pennies on the dollar and then recapitalise that asset ultimately creating value," he said.
The euro was also weak due to worries over the European financial sector's own problems, offsetting the dollar negative news, Schlossberg said.
Comments by several European Central Bank officials that additional interest rates cuts were likely also kept the euro under pressure.
John Sylvia of PNC bank said further weighing on the euro were concerns over the troubled economies of Eastern Europe, which were largely financed by loans from Western European banks.
Amid a global recession, the booming Eastern European economies have seen a dramatic drop off in demand for their goods, dampening their cash flow and possible repayment of their foreign currency loans, he said.
"If the rising default rate of these foreign currency loans continues, the Western European countries may be forced to further bailout their respective eurozone banks," Sylvia said.
"Such a prospect would surely lead to further downgrades of Western European countries, continuing to pressure the euro lower."
In late New York trading, the dollar rose to 1.1685 Swiss francs from 1.1563 on Friday.
The pound was up slightly to 1.4485 from 1.4421 on speculation of improvements within Britain's financial sector, said Kathy Lien of Global Forex Trading.
"Some banks are showing efforts in the purification of their finances as to improve their positions once economic conditions rebound," she said.
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