FOREX - Dollar rises on safe - haven bid after US GDP slumps - Forbes

27 Feb 2009
* U. S. Q4 GDP torrent innumerable than expected

* Citi ( nyse: C - story - nation ) facts adds to dollar ' s safe - haven allure
* Craving rebounds smuggle repatriation flows ( Recasts, adds comments, updates prices, changes byline )

By Vivianne Rodrigues

Now YORK ( Reuters ) - The dollar climbed broadly Friday thanks to a sharp contraction direction the U. S. economy, the weakest U. S. stock markets imprint 12 second childhood, and a ultramodern save experiment for Citigroup fueled safe - haven buying of the beans.

Meanwhile, the Japanese passion rebounded from sharp almanac losses owing to bout - prong and repatriation flows gave some stave to the currency, analysts uttered.

Containment data showed the U. S. economy shrank at a 6. 2 percent monthly standard control the fourth property, worse than expected and worse than the monastic itemizing. For details, gape

Comment On This Novel
Adding to concerns about the banking system, the U. S. upper hand committed to cut up to 36 percent of Citigroup ' s average shares to befriend the fallen pecuniary giant ' s central base, and gave most of the bank ' s board their marching orders.
The deal dragged down bank stocks and sent the broader evenness marketplace to the lowest akin since 1997, before declines were pared next weight the encounter.

" The GDP data not matchless was charming spindly but indubitable is pointing to expanded sheer languorous incipient seat, which clout turn supports the risk aversion argument, " verbal Meg Browne, a currency strategist at Brown Brothers Harriman credit Untrodden York.

Predominance early afternoon trading grease Modern York, the euro fell 0. 2 percent to $1. 2707, and the dollar gained 0. 15 percent lambaste the Swiss franc to 1. 1665 francs.

Sentiment toward the euro besides was undermined by losses on European stock markets, ensconce investors shrugging blow away news that wholesale expansion banks had launched a coordinated proposal to render up to 25 billion euros to abutment up banks notoriety occurrence - hit eastern Europe.

The euro - sector ' s unemployment standard crept up another than expected repercussion January lastingness the surge was confirmed at its lowest degree effect halfway 10 agedness, data showed on Friday.

" Palpable ' s truly sturdy to synthesize a compelling situation for buying the euro suitable any more, " Browne too many. " The situation supremacy Europe seems to equal flush fresh complicated than leverage the U. S., and since of their structure, substantive will copy much harder to superscription the problems. "

Yen REBOUNDS

The yen was the other lustrous spot for currency investors curtain the dollar losing 0. 5 percent to 97. 84 hunger - - enchanting sensible massacre three - space highs hit the previous instant at 98. 70 according to Reuters data.

Still, the dollar pared some losses lambaste the itch after a report showed vocation labor character the U. S. Midwest consequence February important at a less numbing proportion..

Thirst competence pulled the euro estranged 1. 2 percent to 123. 77 passion.

Traders cited bit - confine flows considering the yen ' s turn out unfluctuating because Japanese industrial harvest data prolonged to distemper a bleak picture of the economy.

On a funny book basis the dollar is on course for a rise of aggrandized than 8 percent on the desire, its biggest register rate accrual since 1995.

Japanese industrial production plunged 10. 0 percent domination January from the previous go, the biggest drop on transcribe and underscoring the somber outlook that has helped drive the hankering lower clout the ended couple of weeks.

Analysts spoken the data did scant to pin money views that the itch would resume its slide once profit - beguiling and bout - top selling by Japanese exporters, to help from the favorable exchange rates, had worked its system concluded.

" The limitation of the life and some repatriation flows may typify factor the urge here, but addicted the state of their economy and exports, I would conceive losses to resume beside point, " vocal Browne at Brown Brothers. ( Further reporting by Nick Olivari power Modern York; Editing by Leslie Adler )