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March 27, 2003
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Thursday
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Muharram 23, 1424
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Dollar stabilizes
LONDON, March 26: The dollar kept within recent ranges against major currencies on Wednesday, unmoved by the latest reports of US-led attacks on Baghdad while investors try to gauge the likely length of the conflict.
The dollar was volatile in the first few days of the US-led war on Iraq, but markets were now seeking more clues as to when the war would end, analysts said.
The US currency was lifted off one-week lows on Tuesday by reports of a popular rebellion in Iraq’s second city, Basra, which might give US-led forces a boost if confirmed, but lack of confirmation meant the market was unsure how to react.
There were initial expectations the dollar might get a little bit of support from yesterday’s report of an uprising, but we have had no new news on that, said Paul Robson, international economist at Bank One.
There needs to be another piece of big news on Iraq to get the dollar out of its ranges.
NEW YORK: The dollar was softer on Wednesday but well within recent ranges as traders attempted to make sense of developments in the Iraq war.
As the war entered a seventh day, dealers said it was becoming increasingly difficult to gauge its progress, leaving traders reluctant to place big bets on currencies.
Everyone is watching the war but people are not as willing to trade on individual snippets of news.
It has to be something very specific, a big event, in order to break the ranges in the dollar, said Sean Callow, currency strategist at IDEAGlobal in New York.
Trading on news headlines was risky, as evidenced by the market’s reaction to reports of an uprising in Iraq’s second city of Basra on Tuesday.
The story lifted the dollar off one-week lows on the theory that a popular rebellion against Iraqi leader Saddam Hussein would make things easier for US-led forces.
But by Wednesday, it was still not clear if any rebellion had taken place.
The Basra story was a good example.
People got such mixed news over it and a day later we still don’t particularly know what happened, said Callow.—Reuters
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