Dollar hits 11-month high

FE Team | Published: September 04, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

TOKYO, Sep 3 (Agencies) The dollar soared to an 11-month high against a basket of major currencies on Wednesday as more investors rushed to dump currencies like the euro and Australian dollar on a souring global economic outlook. brThe dollar has also jumped on a tumble in oil prices below $110 a barrel after Hurricane Gustav left energy facilities in the Gulf of Mexico mostly unscathed. As oil prices dropped, more hedge funds and investors have liquidated bets favoring higher-yielding currencies and commodities. brOil prices fell on Wednesday as the US government decided to release crude stocks from its strategic reserve after Hurricane Gustav halted energy production in the Gulf of Mexico. brOil prices were also weighed down by a strong dollar, which Wednesday struck an eight-month high against the euro.brA stronger US currency makes oil more expensive for buyers paying in weaker currencies, which in turn reduces demand and leads to lower prices.brNew York's main contract, light sweet crude for delivery in October, shed 1.42 dollars to 108.29 dollars a barrel after sliding almost six dollars by the close on Tuesday.brBrent North Sea crude for October was down 1.25 dollars at 107.09 dollars.brBrent had tumbled below 105 dollars at one stage on Tuesday to reach its lowest level in four months after Gustav appeared to have wreaked less damage than feared on Gulf of Mexico US energy facilities.brThe United States announced late Tuesday that it was releasing 250,000 barrels of oil from its strategic reserve to help cover lost production.brThere was no oil production on Tuesday in the Gulf of Mexico region, where a quarter of US oil is normally produced, the US Department of the Interior said. Ninety-five percent of natural gas production was also offline.brThe threat from Gustav had raised grim memories of the 2005 hurricanes Katrina and Rita which damaged or destroyed about 165 of around 4,000 oil platforms in the Gulf. Damage this time appeared to be much less severe.brThe euro hit a seven-month low against the dollar and the sterling slumped to a 2-12 year low as market players cut positions before policy decisions by both the European Central Bank and the Bank of England on Thursday. brThe Australian and New Zealand dollars fell more than 1 percent to a one-year low against the dollar. Selling of the Aussie picked up after data showing Australian economic growth slowed slightly more than expected in the second quarter. brThe sharp slide in the euro and Aussie has also forced players to cut back on carry trades in which the low-yielding yen was used to fund positions in higher-yielding currencies. brThe dollar index .DXY, which tracks its performance against six major currencies was up 0.6 percent at 78.484 and touched an 11-month high of 78.546. brThe dollar index has gained about 9 percent since mid-July, in the process breaking long-term technical resistance levels that have convinced many analysts it is poised for a long-term recovery. brThe euro eased 0.6 percent against the dollar to $1.4434. Sterling was also down 0.6 percent, at $1.7715.br