Friday, August 15, 2008

Dollar Heads for Fifth Weekly Gain

The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years, as crude oil prices declined and economies from Germany to Japan contracted.

The U.S. currency rose to the strongest level in almost six months against the euro and a seven-month high versus the yen. The pound dropped for an 11th day against the dollar, the longest run of declines in at least 37 years, on speculation a recession will force the Bank of England to cut interest rates.

"The world is finding the dollar is very, very cheap,'' said Steven Englander, a currency strategist at Lehman Brothers Holdings Inc. in New York. ``There's significant revision of growth outlook and monetary policies outside the U.S. Changing global sentiment is bringing down commodity prices, which is helping the dollar."

Against the euro, the dollar rose 0.8 percent to $1.4713 at 10:31 a.m. in New York, from $1.4826 yesterday. It earlier touched $1.4678, the strongest level since Feb. 20. The U.S. currency increased 0.5 percent to 110.32 yen, from 109.74. It earlier rose to 110.66, the strongest since Jan. 2. The euro fell 0.2 percent to 162.29 yen, from 162.68.

The dollar has risen 1.8 percent against the euro this week in its longest stretch of weekly gains since February 2006. The U.S. currency has increased 8.3 percent after reaching the record low of $1.6038 on July 15. The dollar is headed for a 0.3 percent advance versus the yen, its second straight weekly increase. The euro is poised for a fourth weekly decline against the yen, dropping 1.6 percent.

The dollar's 5.9 percent rally against the euro this month has led banks to raise their forecasts for the U.S. currency.

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