“The dollar held close to a two-year high against the euro and a five-year peak against the pound on Thursday as investors continued to shy away from risky assets as the prospects for the global economy continued to darken.
Analysts said the dollar was benefiting as many positions in commodities, equities and other assets markets had been funded by selling the low-yielding dollar.
Steve Barrow at Standard Bank said the global credit crunch had been the dollar’s salvation, not because the US acted first in implementing interest rate cuts or a bail-out of its financial system, but because the market was short of dollars going into to the crisis.
‘When blind panic grips a market, as it has done since Lehman Brothers collapsed, all the market worries about is ditching positions and returning to the safety of cash,’ he said.”
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