Dollar gets boost from global unease

March 11, 2011 | 07:40

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Investors flocked to the dollar on Thursday as Spain received a ratings downgrade, violence surged in Libya and Saudi Arabia, and China reported a rare trade deficit.

Global turbulence sent investors piling into the safe-haven currency, sending it higher against the euro, yen, Swiss franc and the pound.

"The dollar found a reprieve vs. the euro, trading to fresh weekly lows, after Moody's downgraded Spanish debt," said PNC analysts.

The European single currency dropped to $1.3794 from $1.3906 in New York late Wednesday.

"This week's downgrades of Greece and now Spain have renewed sovereign debt concerns in the currency market that have been pushed aside since the end of last year," the PNC analysts said.

News from other continents did little to ease sentiment.

China said it had returned to a trade deficit in February for the first time in nearly a year, as the world's number two economy tries to wean itself off reliance on exports.

US officials said the momentum in the Libyan conflict was shifting in favor of Moamer Kadhafi, whose forces are "robustly equipped" with Russian weapons.

Protests in Saudi Arabia saw police shoot and wound three Shiite protesters in the oil-rich Eastern Province while trying to disperse a protest calling for the release of prisoners.

The dollar rose to 82.91 yen from 82.70 yen on Wednesday.

Sterling slipped after the Bank of England held interest rates unchanged.

The pound slid to $1.6054 from $1.6198 late on Wednesday.

The dollar stood at 0.9317 Swiss francs (0.9295).

AFP

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