Dollar gained as emerging markets tumbled after Lehman Brothers
Holdings Inc. filed for bankruptcy, deepening a freeze in credit
markets. Investors turned to the safest, dollar-denominated securities
even though the U.S. economy is growing more slowly than those of
developing nations and the Federal Reserve's 0.5 percent benchmark
interest rate compares with 5 percent in South Korea, 8 percent in
India and 13.75 percent in Brazil.
Three-month Treasury bill rates fell to 0.02 percent on Sept. 17, from
1.91 percent in August. The ICE futures exchange's Dollar Index, which
tracks the greenback against the currencies of six U.S. trading
partners, climbed 14 percent since June to 82.41, after falling 5.5
percent in the first half.
``It doesn't matter what your fundamentals are,'' said Sergey
Dergachev, an emerging-market money manager at Union Investment in
Frankfurt, which has $233 billion in assets. ``Investors are trying to
get rid of anything that is associated with market risk.''
The three-month London interbank offered rate for dollars fell every
day last week, to 4.42 percent from 4.82 percent. The Dow Jones
Industrial Average climbed 4.8 percent for its best weekly performance
since 2003.
``There's a funding problem in dollars worldwide,'' said Rajeev De
Mello, head of Asian bonds in Singapore for Western Asset, which
manages about $600 billion.
EUR/USD posted session high at $1.3530 before fell back to session low $1.3400. Offers $1.3530,$1.3555/60, bids $1.3400.