copper gains in n.y. as dollar drops

Copper Gains in N.Y. as Dollar Drops Against Major Currencies

By Millie Munshi

Sept. 24 (Bloomberg) -- Copper closed at the highest in almost eight weeks as a slumping dollar made the metal cheaper for buyers using other currencies.

ICE Futures U.S.'s dollar index, which measures the U.S. currency against the weighted values of the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell to a 15- year low. The metal last week surged 5.9 percent after the Federal Reserve cut its benchmark interest rate to bolster U.S. economic growth in the face of a housing recession.

The weaker dollar will be ``lifting the copper price,'' Catherine Gignac, an analyst at Wellington West Capital Markets Inc. in Toronto, said in a report. The ``cut in borrowing costs will boost the economy and increase demand for copper,'' she said.

Copper futures for December delivery gained 5.25 cents, or 1.5 percent, to $3.645 a pound on the Comex division of the New York Mercantile Exchange, the highest closing price for a most- active contract since July 31.

Copper has gained 27 percent this year, while the dollar dropped 6.7 percent against the euro. The metal, used in homes, cars and appliances, sometimes moves in tandem with economic expansion.

The cut in U.S. borrowing costs will continue to weaken the dollar and drive commodity prices higher, Jim Rogers, chairman of Beeland Interests Inc., said today in an interview in Singapore.

The Fed has ``signaled to the world that they don't care about the value of the dollar and therefore commodity prices are going to go much higher,'' Rogers said. He co-founded the Quantum Hedge Fund with George Soros in the 1970s.

Strike in Peru?

The metal also gained on speculation that a strike at Southern Copper Corp., the world's fifth-largest producer of the metal, will disrupt supplies. Workers at the company's Ilo smelter and Toquepala and Cuajone mines in Peru voted to walk out Oct. 2, a union official said last week.

``This appears to be yet another strike that will reduce copper output,'' Ian Howat, an analyst at National Bank Financial in Toronto, said in a report.

Labor unrest has cut production in Peru, Chile and Mexico this year as miners pressed for higher wages. The metal has risen fourfold in the past four years, boosting profits for mining companies including BHP Billiton Ltd., the world's biggest.

On the London Metal Exchange, copper for delivery in three months gained $155, or 2 percent, to $8,040 a metric ton ($3.65 a pound). The metal rose to a record $8,800 in May 2006.

ICE Futures was formerly known as the New York Board of Trade.

To contact the reporter on the story: Millie Munshi in New York at [email protected] .