THE DOLLAR recovered from early sharp losses yesterday, hitting a one-year high against a basket of currencies.
The violent price swing came as investors digested news that the US government had bailed out mortgage guarantors Freddie Mac and Fannie Mae.
The dollar sold off to a low of $1.4428 against the euro and $1.7975 against the pound in Asia trade as worries about US public finances weighed on the greenback. But the dollar staged a dramatic turnround as European markets opened.
Analysts said the rescue plan did little to change the backdrop to the dollar's recent surge, with economies outside the US still expected to slow markedly and oil prices to head lower.
Simon Derrick of Bank of New York Mellon said that given the pre-emptive action of the US authorities, the outlook for the US economy was arguably more positive than for other regions.
By midday in New York, the dollar recouped its losses to stand up 0.5 per cent at $1.4202 against the euro, flat at $1.7657 against the pound and 0.7 per cent higher at $1.1270 against the Swiss franc. - ( Financial Times)
