The dollar resumed its decline against the euro in choppy trading Friday as European officials sought to calm worries about the prospect of Ireland defaulting on its debts.
After gaining for a week against the euro, the dollar went back on the downswing. The euro rose after a joint statement from five European finance ministers reassuring investors that a bailout from the European Union would not cause them heavy losses.
In late afternoon trading in New York, the euro traded at $1.3693, up from $1.3658 late Thursday, but below its peak of $1.3777 in early New York trading.
This week, the euro has still dropped about 3 U.S. cents, the first significant weekly decline since early September.
The European currency peaked at $1.4281, its highest point since January, last Thursday, just a day after the Federal Reserve embarked on a program to support the U.S. economy through lower interest rates. Lower rates tend to weigh on a currency, and the dollar had dropped sharply since late August, when the Fed first hinted at the move.
President Barack Obama on Friday defended the Fed's move against criticism from German and Chinese officials, who allege the Fed is trying to bolster U.S. exports by weakening the currency, a tactic the U.S. has accused China of pursuing.
Obama was speaking at a news conference following the meetings of the Group of 20 nations, which ended Friday without an endorsement of a U.S. push to get China to let its currency rise.
As the dollar has plunged against major currencies and emerging-market currencies, officials in several of those countries — Japan and Brazil, for example — have moved to try to contain the rise in their currencies. A stronger currency makes their exports harder to sell.
The U.S. currency rose over the past week after a long decline. Investors had sold off the euro because of renewed worries about the potential need for the European Union to provide emergency aid for Ireland, as well as sluggish economic growth in the region.
New bailout rules formed after the EU and the International Monetary Fund created a rescue fund for Greece in May had investors worried that they would need to take on heavier losses if Ireland also required help.
But finance ministers from five leading EU nations on Friday issued a joint statement stressing that the possible new mechanism would take effect only after mid-2013 and "does not apply to any outstanding debt."
In other trading Friday, the pound rose to $1.6146 from $1.6114, while the dollar inched up to 82.45 Japanese yen from 82.43 yen.
Against other major currencies across the world, the dollar trended higher. The U.S. currency rose to 1.0098 Canadian dollars from 1.0041 Canadian dollars, and gained up to 0.9776 Swiss francs from 0.9752 Swiss francs.
The dollar was also higher against the Australian and New Zealand currencies, and also gained against most currencies of developing economies in Asia.