Thursday, 24 Feb 2011

Rising Crude Prices Weigh Down USD

The US dollar fell broadly on Thursday, with further losses seen as likely, pressured by a surge in oil prices as investors feared civil unrest in Libya could spill over to other top producers including Saudi Arabia.

The safe-haven Swiss franc, on the other hand, hit a record high against the greenback, benefiting from the ongoing geopolitical turmoil in the Middle East. The franc has gained in eight of the last nine sessions versus the dollar.

In the last two weeks, the Swiss currency has gained 5.1 percent so far, its best showing since late June last year.

Brent crude oil LCOc1 leapt to its highest since August 2008 on concern that the unrest, which has cut more than a quarter of OPEC-member Libya's output, could spread to other producers. High oil prices tend to be negative for the dollar as the United States is a heavy oil importer.

Turmoil in the Middle East also supported the yen. Investors tend to buy back the yen in times of uncertainty as they unwind risky assets financed by the Japanese currency's low rates.