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FOREX-Dollar falls vs yen as U.S. debt talks sputter
October 15, 2013 / 8:06 PM / 4 years ago

FOREX-Dollar falls vs yen as U.S. debt talks sputter

* Sen. Durbin says U.S. Senate talks suspended
    * Markets eye looming deadline on Oct. 17
    * Dollar hits session low vs yen


    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 15 (Reuters) - The dollar dropped to session
lows against the yen on Tuesday as talks on raising the U.S.
debt ceiling floundered, bringing the world's largest economy
closer to potentially defaulting on its debt obligations.
    The Senate halted discussions on its own plan and is waiting
for the Republican-controlled House of Representatives to come
up with an alternative proposal before Thursday, when the U.S.
Treasury says the government will reach its borrowing limit.
 
    Senator Richard Durbin, the second-ranking Democrat in the
Senate, said Senate Republican leader Mitch McConnell would have
to wait for some signal on the next steps from House Speaker
John Boehner before he takes any further moves. 
    Many in the market have expressed frustration about the
fiscal drama in Washington.
    "In order for Congress to get to the finish line, both the
Senate and House have to sign the bill and with 2 days to go
before the U.S. reaches its borrowing limit, it is still not
clear if conservative House Republicans will support the bill,"
said Kathy Lien, managing director at BK Asset Management in New
York. 
    The dollar fell to session lows against the yen at 98.13 yen
 following Durbin's comments. Earlier, it hit a two-week
high of 98.72 and was last at 98.41, down 0.2 percent.
    The dollar also dropped to the day's low versus the euro,
which rose to session highs of $1.3531. The euro,
however, was still down on the day, falling 0.3 percent to
$1.3518.
    ------------------------------------------------------------
    Treasury bill maturing Oct. 31 seen as at-risk of missed
payment due to debt limit crisis.------------------------------------------------------------
    Yields on two-year Treasury notes issued nearly two years
ago and maturing on Oct. 31 rose to just over 0.7 percent from
near zero percent. Prompt payment of the principal due on Oct.
31 was seen at risk due to the potential failure to raise the
U.S. debt limit.

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