Dollar pops on rescue plan
September 19th, 2008 | by admin |September 18, 2008: 10:21 PM EDT
U.S. plans stunning bailout
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NEW YORK (AP) — The dollar jumped Thursday night after the government said it was putting together a plan to help banks get rid of bad debts.
In overnight trading, the dollar jumped to 106.19 yen, while the euro slid to $1.4247 and the pound dropped back down to $1.8076.
Earlier in the day Thursday, the 15-nation euro had traded at $1.4370, slightly down from $1.4376 late Wednesday. The British pound slid to $1.8192 from $1.8245, while the dollar dropped to 104.93 Japanese yen from 105.24.
The plan will need approval from Congress. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told lawmakers about the options under consideration Thursday evening.
The dollar had seen volatile trading against the major currencies as investors continued to flee to short-term government debt, oil and gold — so-called "safe" assets amid the meltdown in global equities.
Earlier on Thursday, the Federal Reserve and other central banks across the world pumped dollars into money markets to try to relieve a credit crunch. The New York Federal Reserve injected $55 billion into the domestic system, while the Fed transferred up to $180 billion worth of dollars abroad.
"The dollar is rallying due to reports of what appears to be a remarkable intervention by the U.S. authorities," said Ashraf Laidi, chief foreign exchange strategist at CMC Markets US in New York, referring to a CNBC report in the late afternoon, before Paulson’s plan was confirmed Thursday night. He added, however: "The gains from each of these announcements have proven to be very short-lived."
Laidi referred to the Fed’s bailout of American International Group Inc. earlier this week and today’s pumping of liquidity into global markets.
In other New York trading around 3 p.m., the dollar was unchanged at 1.1005 Swiss francs, and edged higher to 1.0691 Canadian dollars from 1.0672. 
