Dollar keeps strength amid market panic

[You must be registered and logged in to see this image.]





SINGAPORE: The dollar extended gains Friday thanks to its reputation as a safe haven during crises, as turmoil sparked by fears of another recession churned global markets for a second day.

The euro recovered from 10-year lows but the global outlook remained bleak after the US central bank warned of significant risks to the world's biggest economy and as the eurozone struggled to prevent Greece's debt crisis from spiralling out of control.

Strikes swept across Greece on Thursday amid new budget cuts, with doubts growing that the government can implement new EU-IMF measures needed to secure funds and avert a debt default.

In morning Asian trade, the dollar was up at 76.2275 yen from 76.20 yen in late New York trade Thursday.

Japanese financial markets were closed for a public holiday.

The greenback also rose to Sg$1.3017 from Sg$1.2878, to 1,194.47 South Korean won from 1,179.57 and to Tw$30.6070 from Tw$30.34.

The commodities-linked Australian dollar was also trading sharply lower on Friday, falling to 97.88 US cents, well down on its close of 100.18 cents the day before.

Since breaching parity in October last year the currency has rallied consistently near or above the US$1.00 mark, hitting a record of US$1.1081 in July.

Asian shares were also tumbling Friday, mirroring falls in US and European stock markets.

"The dollar has already strengthened quite a fair bit, and the trend will continue for a while," said Simon Teo, a senior currency dealer at Phillip Futures in Singapore.

"Europe still has a lot of problems, pushing the euro currency lower. With the US dollar strengthening, it has a double effect on the euro."

The euro was trading at $1.3522 in morning trade, up from 1.3470 late Thursday in New York. It was changing hands at 103.0379 yen, after sinking to a 10-year low of 102.60 yen.

Singapore's DBS Bank said the world is looking for leadership from the ongoing International Monetary Fund-World Bank annual meetings in Washington which gathers the world's finance chiefs and central bank governors.

"Needless to say, market sentiment is at its most fragile since (the) Lehman crisis," DBS said, referring to the collapse in late 2008 of US investment bank Lehman Brothers, sparking a global financial crisis that lasted well into 2009.

"More than ever, markets now need to see global leaders holding each other's hands, and not pointing fingers at each other, to help restore stability to global financial markets and return the world to its recovery path." (AFP)