Azerbaijan, Baku, Feb. 22 / Trend /
The European currency fell on Tuesday while the dollar rallied broadly after escalating political tension in Libya prompted selling in higher-yielding assets for the safety of the U.S. currency and also the Swiss franc, Reuters reported.
Risk aversion gripped the currency market after the defiance of Libyan leader Muammar Gaddafi in the face of a mounting public revolt cranked up political uncertainty and prompted a cut in supplies from one of the world's major oil exporters.
According to the currency strategist at SEB in Stockholm Richard Falkenhall, investors are scaling down on exposure across the board. He also added that speculators were unwinding long positions in currencies including the euro built up from the start of 2011.
"Libya is the first major oil-exporting country to be affected ... if this spreads to other oil-exporting countries, it will not be a good sign."
In early European trade, the euro fell 1 percent on the day to $1.3527, according to Reuters data.
The euro fell 1 percent to 112.48 yen, which brushed off concerns that higher oil prices could have a deep impact on the Japanese economy, which is heavily reliant on oil imports. The dollar slipped 0.3 percent 82.85 yen.