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US dollar poised to appreciate

10 February 2009 15:23 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. The dollar gained broadly as investors sought the perceived safety of the U.S. currency before the U.S. government announces the outline of a widely anticipated plan to shore up its ailing banking sector.
The plan was expected to pass the Senate on Tuesday, set the stage for negotiations with the House on a final compromise on economic stimulus legislation. Hopes for the package boosted risk appetite of investors who wish the plan would help U.S. economy to get out of recession.
The euro tumbled on conflicting reports that Russian banks were seeking government help to restructure its foreign corporate debt, Reuters reported.
But investors were generally wary of taking large positions ahead of the U.S. plan, which will likely focus on helping banks offload their so-called "toxic assets" and boost their capital.
Because the new plan is very different from the previous one, the dollar is likely to appreciate against a basket of major currencies after the announcement.
U.S. Treasury Secretary Timothy Geithner is expected to unveil the outline of the plan at 1600 GMT.
Besides, Geithner and the G7 finance ministers are due to meet Friday in Rome as governments redouble their efforts to battle a global recession.
The European Union announced an extraordinary summit this month on the global economic crisis to coordinate action amid concerns about a return to protectionism.