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FX round-up: Dollar makes a comeback

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Date: Sunday 20 Apr 2008

LONDON (ShareCast) - The dollar rose from record lows against the euro on Friday and gained against most other currencies on optimism that the worst of the credit market crisis may be over.

US banking giant Citigroup posted more than a $5bn loss and write-downs of $6bn but its shares rose as sentiment grows that the worst of credit crunch is nearing an end.

The euro came under pressure on concern that the currency is becoming too strong and dampen exports.

Late Thursday, Luxembourg Prime Minister Jean-Claude Juncker told reporters that he was concerned the euro was moving in a direction that wasn’t desirable.

He was joined by several other influential business figures who expressed concern about the rising cost of manufacturing products in Europe.

Sterling rallied on Friday on speculation that the Bank of England could step in to help banks with the current lending squeeze by allowing them to exchange mortgage-backed securities for government bonds.

Comments from BoE economist Charles Bean that UK inflation is expected to rise above 3% in 2008 also boosted the currency.

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