Dollar firms as uncertainty overshadows weak data

AFP , NEW YORK

Sun, Oct 19, 2008 - Page 10

The dollar traded generally higher on Friday, with anxiety about the global financial crisis overshadowing the latest grim news on the US economy.

The uncertain outlook, analysts said, has favored the dollar, which is seen as a safe haven in times of turmoil.

The euro was quoted at 9pm at US$1.3408, down from US$1.3447 on Thursday in New York.

The dollar was little changed against the yen, another currency seen as a safe haven, at ¥101.63 from ¥101.65.

The greenback shook off news that construction starts on new US homes slumped an additional 6.3 percent last month to the lowest level since the recession in 1991.

Housing starts fell to an annualized rate of 817,000. That was down 31.1 percent from a year ago in the latest evidence of the bursting of the housing bubble that has ravaged the US economy and led to a global financial crisis.

“Firmness in the US currency appears to stem from asset liquidations, not a comparison of economic fundamentals,” said Larry Greenberg of the financial Web site Currency Thoughts.

“Unless the speed of progress in reliquifying money markets accelerates, investor anxiety may hit another air pocket next week. The dollar has handled such panic attacks well and conversely gold — the quintessential bet against the dollar and US macroeconomic policy — has performed poorly,” he said.

Investors have been trying to assess the effectiveness of a raft of government emergency measures — bank rescue packages and partial nationalizations — aimed at restoring confidence in the global finance system.