NEW YORK, Jan 5: The dollar firmed on Monday, underpinned by news of a planned US stimulus package and increased expectations of interest rate cuts by major central banks.

Investors welcomed news US President-elect Barack Obama is seeking as much as $310 billion in tax cuts as part of a proposed stimulus package that could be worth up to $775 billion.

“The combination of tax cuts, infrastructure spending and job creation under the Obama stimulus package takes out some of the pain from the economic recession we’re in,” said Ron Simpson, director of currency research at Action Economics in Tampa, Florida.

“The Federal Reserve and US Treasury are being pro-active in dealing with this crisis. I think at some juncture, the US efforts would turn the economy around quicker than many of the other countries and that should be dollar-positive,” he added.

—Reuters