Sun, Sep 16, 2007 - Page 10 News List

Dollar steadies after hitting record low against euro

AFP , NEW YORK

The US dollar steadied on Friday a day after plunging to a record low on the euro, while the British pound fell on jitters after a Bank of England bailout of key British lender Northern Rock.

The single European currency dipped to US$1.3876 at 9pm, down from US$1.3881 late on Thursday in New York. The euro on Thursday soared to a record US$1.3927 on fears for the future of the US economy and expectations of a rate cut by the Federal Reserve.

The greenback on Friday was boosted by profit-taking in the euro and risk aversion on the part of investors who saw the dollar as a refuge following the Northern Rock bailout.

The crisis at Northern Rock, a victim of the global credit squeeze that itself was brought on by the sharp downturn in the US housing market, also weighed heavily on the pound.

The pound sank to US$2.0075 from US$2.0252 on Thursday as customers of Northern Rock rushed to withdraw their savings, forming lengthy queues in front of branches despite assurances that deposits were safe.

Meanwhile US data suggested slowing in the world's biggest economy but not enough to lead to recession, said analysts.

"The US dollar showed signs of life through end-of-week trade, as the greenback shrugged off mediocre advance retail sales data to rally on improved consumer confidence figures," David Rodriguez at Forex Capital Markets said.

Rodriguez said the University of Michigan consumer sentiment index "was hardly impressive at 83.8 versus the 83.4 print seen in August, but such data reinforces the view that consumers remain thus far unaffected by credit and real estate market troubles."

In Washington, the Commerce Department said US retail sales rose a weaker-than-expected 0.3 percent last month. While analysts had been expecting a 0.5 percent rise, they sought to minimize the impact of the result.

"Overall consumer spending remains sluggish but does not show recessionary trends," said Dick Green, an analyst at Briefing.com.

In late New York trading, the US dollar stood at ?115.35 after ?115.04 on Thursday and at 1.1896 Swiss francs from SF1.1860.

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