* Dollar falls against yen, focus on 90 yen level
* Sterling takes hit after BoE King's weak pound comments
* G20 meeting in Pittsburgh in focus
(Updates prices, adds details, quote, changes byline)
By Leah Schnurr
NEW YORK, Sept 24 (Reuters) - The dollar gained against the
euro on Thursday after central banks said they will scale back
some emergency programs that have injected trillions of dollars
into banks as financial markets stabilize.
Sterling also neared a six-month low against the euro after
Bank of England Governor Mervyn King told a regional British
newspaper a weak pound was helping UK exporters and the economy
cope with a sharp downturn. For details, see []
The vast amounts of money pumped into the global economy as
well as low interest rates have put pressure on the U.S. dollar
and increased its appeal for use in carry trades.
In a carry trade, an investor borrows in a low interest
rate currency and uses the funds to invest in higher-yielding
assets in other countries.
"Any news that has to do not with the economy per se but
with the dollar not being the primary funding currency for the
carry trade is going to be reacted to very violently" to the
upside, said John Kicklighter, currency strategist at
DailyFX.com in New York.
The steps taken by several major central banks, as well as
weaker-than-expected U.S. housing data reversed the dollar's
earlier softness as traders said it sparked investors to sell
currencies and assets seen as higher risk in favor of the
perceived safety of the U.S. dollar.
The Federal Reserve, Bank of England, European Central Bank
and Swiss National Bank simultaneously announced plans to scale
back their emergency lending programs on Thursday.
[]
That comes a day after the Fed kept interest rates at a
record low and signaled they would stay there for a long time.
At the same time, the Fed said it would slow purchases of
mortgage debt to extend the life of that program.
Richard Franulovich, senior currency strategist at Westpac
in New York, said the central banks appear to be "turning less
accommodative," and that coupled with weaker-than-expected U.S.
housing data was "giving the dollar a bid tone."
The euro was down 0.4 percent at $1.4667 <EUR=> in the
early afternoon, off a session high of $1.4803 and a one-year
peak of $1.4842 hit a day ago. The euro was falling steadily in
the final hours of the New York session and remained near the
low of the global trading day of $1.4634.
Sterling fell 1.8 percent to $1.6055 <GBP=>, dropping below
$1.61 for the first time since July, and the euro was up 1.4
percent at 91.35 pence <EURGBP=>, a near six-month high.
More than 1,700 euro/sterling trades went through Reuters
Matching in the hour after King's comments, the most in a
single hour for at least three months, Reuters data showed.
The dollar was little changed at 91.32 yen <JPY=>, though
that was well off a 90.36 session low.
G20 and FX
Analysts expected currencies to feature in some of the
discussions among Group of 20 leaders in Pittsburgh when they
begin meeting on Thursday.
Traders noted the contrast in King's comments with those
from euro zone capitals suggesting some discomfort with the
euro's recent strength and the need for the G20 to address
global imbalances, notably Asian currency weakness.
German Chancellor Angela Merkel said currencies should be
part of the discussion in Pittsburgh, and Finance Minister Peer
Steinbrueck mentioned China's yuan as a focus for discussion.
The U.S. delegation was expected to push G20 leaders to
address a lopsided global growth model by encouraging debtor
nations such as the United States to save more and exporters
like China, Japan and Germany to spend more.
But that would likely require a weaker dollar, and a French
government source told Reuters this week that France is worried
about euro strength against the dollar.
The euro was risen 5 percent against the dollar this year.
(Additional reporting by Steven C. Johnson, Gertrude Chavez
Dreyfuss and Nick Olivari)
(Editing by Theodore d'Afflisio)
