FOREX-Dollar set for biggest weekly rise since the 2008 financial crisis

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, March 20 (Reuters) - The dollar eased on Friday as
stock markets around the world recovered but remained on track
for its biggest weekly rise since the global financial crisis in
2008 as a global scramble for funding sent other currencies
reeling.
Currencies from the Australian dollar AUD=D3 to the
British pound GBP=D3 tumbled to multi-year lows this week,
after coordinated rate cuts by central banks and billions of
dollars of fund injections failed to calm panicky markets.
But Friday restored some calm after days of selling. The
Australian dollar AUD=D3 jumped 3.4%, although analysts warned
that it was too early to call an end to the rout.
The U.S. dollar is up about 3.5% against a basket of
currencies =USD through a week when investors have liquidated
everything from stocks to bonds to gold and commodities. It hit
a three-year peak of 102.99 in early Asian trading.
Gauges of expected market swings in the euro for one-month
maturities EUR1MO= edged lower while currency swap spreads,
where most of the funding pressure in dollar markets was evident
in recent days, eased.
"The dollars are the grease in the cogs of the financial
system and when they were in short supply, things just weren't
'working'," said Brad Bechtel, global head of FX at Jefferies
LLC. "Now things are getting a little better."
The euro was among the major gainers EUR=EBS , briefly up
more than 1% to $1.0832 before retracing some gains to stand
0.4% up on the day.
Sterling GBP=D3 rose 3.3% from a 35-year low to $1.1878.
"People are selling everything and the common thread is they
just want cash," said Stuart Oakley, a Singapore-based executive
with Nomura, who runs the bank's trading with its clients.
"People just want cash because at the end of the day, people
don't know where their next revenue is coming from and they've
got payments to meet. I don't think that's going to change."
Cross-currency basis swaps, which show the cost of borrowing
dollars abroad, showed that strains remained.
The premium over interbank rates that investors were paying
to swap yen for one-year dollar funding JPYCBS1Y= was around
68 basis points, close to the 2016 highs touched last week.
Euro cross-currency basis swap spreads also remain wide
EURCBS3M=ICAP , but tightened to 9 bps from levels of above 100
bps seen earlier this week.
Also showing a tightening trend is the FRA-OIS spread
USDF-O0X1=R , a barometer of risk in the interbank market.