October 14, 2001	Sunday	Rajab 26, 1422

NEW YORK, Oct 13: The dollar sank against the euro and Swiss franc on Friday after a report showed US retail sales plunged in the wake of last month’s suicide airplane attacks and as a reported anthrax case in New York stokes fears of possible biological attacks.

The day’s news was a double blow to the dollar, coming just a day after the greenback managed to recover all the ground it lost after the Sept. 11 attacks, when hijackers slammed airplanes into New York’s World Trade Center and the Pentagon.

The morning began with news of a 2.4 per cent slide in US retail sales in September — the steepest falloff in nearly nine years. The dollar tumbled as investors fretted falling consumer spending will drive the economy into a recession.

An unexpected rise in a gauge of US consumer confidence briefly tempered the dollar’s losses, but the greenback lurched even lower still after NBC said a news employee tested positive for cutaneous anthrax, the fourth confirmed exposure to the deadly bacteria at a media company since Sept. 11.

The NBC anthrax case comes after three workers at a tabloid newspaper in Florida were diagnosed with respiratory anthrax, a different form of the disease. The government said there was no evidence to link the New York and Florida cases.

The markets are very, very nervous, said John McCarthy, director of foreign exchange at ING Barings Capital Markets.

It is possible there will be a cumulative effect of these events here in the United States that will have a profound effect on the consumer, business investment, equity markets and the economy that are worse here than in any other place in the world, which will have an effect on the dollar, he said.

The euro sailed as high as 91.25 cents, snapping a three-day losing streak that took it to one-month lows against the dollar below 90 cents on Thursday, before settling just below 91 cents in late Friday trade.

The dollar fell as low as 120.74 yen before steadying near 121.25 yen.

Against the Swiss franc — the biggest beneficiary in the uncertainty following the Sept. 11 attacks — the dollar fell as far as 1.6250 francs before steadying near 1.6280 francs.

We tell some of our clients to keep your mouse clicked to dollar/Swiss and watch CNN. That’s how you can combat the war with your money, said Ashraf Laidi, chief currency analyst at MG Financial Group.

I heard traders joke: ‘I hedged the Swiss franc against anthrax.’ It’s horrible, but that is really what is happening here, he said.

Despite the dollar’s steep losses, currencies were confined to recent ranges, with dealers uncertain how to trade amid fears of attacks, concerns over the global economy, and the US-led assault in Afghanistan.

You might see people pulling back altogether and not doing anything because it’s just too hard. It’s too hard to make sense of what is going on, said ING’s McCarthy.

While the dollar was dented by security and economic fears, analysts said euro gains could be limited after confidence in the currency was damaged on Thursday, when the European Central Bank disappointed the market by leaving interest rates steady.

Dealers may also be cautious about selling the dollar too aggressively against the yen.

Overnight, Japanese Finance Minister Masajuro Shiokawa said it might be better if the yen were slightly weaker than current levels around 120-121 per dollar, and said Japan stood ready to intervene should the yen rise against the dollar

Japan intervened to weaken the yen seven times in September to curb the yen’s export-damaging strength.—Reuters