Dollar Leaps on Hopes for U.S. Rescue Plan

Sept. 19, 2008
Stock markets rallied all over the world.

The dollar jumped on Sept. 19 against major rival currencies as world stock markets surged skywards on hopes of a U.S. government plan to rescue troubled financial firms, traders said. The European single currency sank to $1.4197 from $1.4348 in New York late on Sept. 18. Against the Japanese currency, the dollar leapt to 107.46 yen from 105.37 yen.

Gold fell in value, having bounced higher earlier this week as investors had sought a financial safe-haven.

Investors were waiting to hear new developments after reports that the U.S .government was preparing a lifeline to wipe out the bad debt that has weighed on banks and set off the current financial crisis.

U.S. financial authorities have meanwhile banned short-selling -- when investors borrow company shares to sell in anticipation of profiting from a fall in value -- in a bid to help crisis-hit markets. Britain on Sept. 18 declared a halt to short-selling in financial sector stock.

"U.S. Treasury Secretary (Henry) Paulson and Federal Reserve Chairman (Ben) Bernanke met with lawmakers yesterday (Sept. 18) to push a plan that would move troubled assets from the balance sheets of American financial companies into a new institution," said Commerzbank analyst Antje Praefcke. "The initiative is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.

Financial markets very much appreciated this plan. Stock markets rallied all over the world. The optimism towards the U.S. economy and the dollar is now clearly visible again."

Copyright Agence France-Presse, 2008

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