(Bloomberg) -- The dollar dropped to the lowest level this year against the euro as the prospects for economic recovery spurred a rally in global stocks, helping to push gold above $1,000 an ounce and oil to more than $71 a barrel.The decline pushed the trade-weighted U.S. Dollar Index down by the most since July as the greenback became the cheapest funding currency in the London interbank lending market. The Brazilian real and South African rand rallied more than 25 percent this year as investors sought higher-yielding assets in emerging-market nations.
"You are seeing a reversal of flight to quality as investors start to put money into higher-yielding assets," said Warren Naphtal, who oversees $915 million in currency assets as chief investment officer in Weston, Massachusetts, at P/E Investments, an asset-management company. "The U.S. dollar is a good source for cheap funding."
The dollar depreciated 1.3 percent to $1.4514 per euro at 2:32 p.m. in New York, from $1.4332 yesterday, after reaching $1.4535, the weakest since Dec. 18. The U.S. currency dropped 1 percent to 92.16 yen, from 93.08. The euro advanced 0.3 percent to 133.75 yen, from 133.39.