Dollar Gains on U.S. Government Plan to Revive Credit Markets

The dollar rose the most in more than five months against the yen as central banks pumped cash into global credit markets and U.S. officials said they were developing a plan to stop financial institutions from failing.

The currency also gained for the first time in three days versus the euro as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution.

The dollar rose 2.2 percent versus the Japanese currency, the largest gain since April 1, to 107.74 yen before trading at 107.40 as of 10:53 a.m. in London, paring this week's drop to 0.4 percent. The U.S. currency climbed 1 percent to $1.4203 per euro. The euro advanced 0.9 percent to 152.60 yen from 151.28 yen, following a 0.9 percent gain yesterday.

The yen
dropped against higher-yielding currencies today as appetite for carry trades rebounded. It fell 2.2 percent to 86.72 versus Australia's dollar and 1.7 percent to 72.50 against New Zealand's dollar.

The Australian and New Zealand dollars rose for a third day against the yen. The currencies gained after U.S. and Asian stocks rallied as the rescue plan boosted demand for higher-yielding assets funded with loans in Japan. The Aussie bought 81.11 U.S. cents from 80.66 cents in Asia yesterday and 82.36 cents on Sept. 12 in New York. The kiwi bought 67.52 U.S. cents from 67.80 cents yesterday and 66.82 cents on Sept 12 in New York.

India's rupee
rose the most in almost two months on speculation stock gains will help stem capital outflows triggered by turmoil in financial markets. The currency rose 1.4 percent to 45.83 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The gain was the most since July 23.

Russia's ruble
rose to the highest level in a week against the central bank's dollar-euro basket as stocks surged following a two-day suspension in trading. The ruble was at 30.3490 versus the basket by 2:23 p.m. in Moscow, the strongest since Sept. 10., from 30.3868 yesterday and 30.3751 a week ago.

Chinese yuan was little changed, snapping two days of gains, on speculation China is favoring slower currency appreciation to support economic growth amid turmoil in global financial markets. The currency closed at 6.8350 a dollar in Shanghai as of 5:30 p.m., according to the China Foreign Exchange Trade System. It gained 0.15 percent this week, erasing its loss for the previous two weeks.,
9/19/2008 5:21:43 AM