* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, March 23 (Reuters) - The dollar erased early losses
on Monday as a global selloff in stocks intensified, boosting
its safe-haven appeal.
A 9% rally by the dollar over the past two weeks ended on
Friday after major central banks stepped up their dollar
injection facilities to cope with a global scramble for funding.
But Monday's trading brought a collapse in stock markets,
raising concern that central bank actions were not enough.
"The result is that the banking system simply doesn't have
enough dollars to lend to everyone who wants to borrow them ...
For now, it seems that the demand for the U.S. dollar is
insatiable," said Marshall Gittler, head of investment research
at BDSwiss Group.
Against a basket of other currencies =USD , the dollar rose
0.2% to 102.82 after falling as much as 0.7% earlier, up nearly
1% from Asian lows. On Friday, it hit a January 2017 high of
102.99.
Also fuelling the dollar's rise was a turnaround in dollar
positions among hedge funds to a net short from an overall long
bet, according to latest positioning data. That raised
speculation that the dollar's rally could be partly explained by
short covering by traders.
Legislators in Washington were unable to pass U.S. stimulus
measures on Sunday as Republicans and Democrats tussled over a
proposed $1 trillion spending package, stoking disquiet about
the dollar's gains, analysts said the majority of investors
preferred to hold cash.
"We've moved from risk-off to a phase where major players
are competing with each other for the safety of holding dollars
in cash," said Yukio Ishizuki, FX strategist at Daiwa Securities
in Tokyo. "There are still a lot of investors who need to sell
riskier assets, and they want to hold their money in dollars."
Against the yen JPY=EBS , the U.S. currency bounced between
gains and losses. It last traded down 0.6% at 110.07. Versus the
Swiss franc CHF= , the dollar fell 0.2% to 0.98 francs as the
Swiss central bank increase foreign currency interventions to
their highest since the Brexit referendum in 2016. The dollar initially rose against the euro EUR=EBS to the
strongest since April 2017, then pared gains to trade 0.2% lower
at $1.0636 per euro.
The dollar also closed in on multi-year highs against the
Australian AUD=D3 and New Zealand NZD=D3 dollars as the
economic costs of self-isolation triggered the largest intraday
decline ever in New Zealand shares.
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USdpositions https://reut.rs/3doNKUA
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