The dollar rose against most major currencies on June 22 after the World Bank cut its global economic forecast.
The global economy will decline by 2.9 percent in 2009, according to a new World Bank report. It was much worse than a loss of 1.7 percent forecasted by the World Bank in March.
Economic growth in developing countries is expected to slow sharply, from 5.9 percent in 2008 to 1.2 percent in 2009, the report said. Collective GDP of rich countries is expected to fall 4.5 percent in 2009. When India and China are removed from the total, developing countries as a group will experience a contraction in GDP of 1.6 percent.
"Extraordinary measures by governments around the world have helped save the global financial system from complete collapse, but the economic recession in the real sectors persists," said Justin Lin, the World Bank's chief economist and senior vice president. "To break the cycle, we need bold policy measures, including restoration of domestic lending and global capital flows."
The World Bank said the global GDP is expected to rebound to 2 percent in 2010 and 3.2 percent by 2011. In developing countries growth is expected to be higher, at 4.4 percent in 2010 and 5.7 percent in 2011.
The report sent U.S. stocks sharply lower, lifting safety haven demand in currency market for the dollar and the yen.
The euro bought 1.3865 dollars in late New York trading compared with 1.3956 dollars it bought late Friday. The pound fell to 1.6344 dollars from 1.6518 dollars.
The dollar rose to 1.1520 Canadian dollars from 1.1345 Canadian dollars, and rose to 1.0862 Swiss francs from 1.0797 Swiss francs. It fell to 95.93 Japanese yen from 96.19 Japanese yen.
Source:Xinhua
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