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With Federal Reserve leaving interest rates fixed at 2 percent, dollar experienced a growth on Tuesday. Fed has held the key rates for time being in order to calm down the troubled economical markets, as instead of rate cutes central banks offers conveniences.

With apprehensions caused by insurer American International Group, dollar went into volatile state and made many investors sense possible rate cut. The whole state was followed by a stock market suffering a major decline, biggest one since 9/11. In spite of debates rising up regarding Fed announcement, investors were optimistic. With Bloomberg’s reporting about consideration of loaning to AIG, dollar got that extra push up against yen.

Vice president of trading at Tempus Consulting in Washington, Greg Salvaggio, said that the decision of Federal Reserve for steadying the interest rates will prove as a confident factor for market and bring out the positive vibe about things not being as bad as considered.

On Tuesday, the late New York trading saw euro falling to $1.4153 , with a 0.8 percent of slip. The currency had a well-off session on Monday as it touched $1.4479. While the ICE Futures Exchange’s dollar index moved up to 79.109 DXY with a 0.8 percent high. Dollar experienced a recovery as it rose to 1.6 percent with 106.24 , the revival from a four month low brought its finest moment ever since 1st April.

On Monday, yen faced a major gain against the greenback. Even euro had its time, as it moved on to a 150.40 yen with 0.7 percent of high.

In the midst of concerns regarding global credit crisis, many worried investors turned towards the refuge of the dollar, which acted as a safer zone on Tuesday. Factors that added to the concern regarding economical system of United States included crumpling of Lehman Brothers and the fall in earnings of Goldman Sachs.

Dollar demand also increased with statements from Goldman Sachs. Amid the disturbances caused by financial problems at American International Group and fall of Lehman, panicky investors moved to the safer options and opted for U.S. government bonds discarding the stocks. To conquer the credit concerns, money markets were swamped with cash by central banks. The decision was also aimed at helping the lending.

Market analysts believe that dollar received an edge of benefit from the financial turbulence and jitters arising in United States, as it prompted investors to send money home.

Senior currency strategist CIBC World Markets in New York, Adam Fazio, considered the huge anticipation for foreign-based U.S. investments as well as foreign funds a reason behind the upswing of dollar. He also anticipates a continuation in the trend. Adam added that any such big trend is bound to continue and this dollar upswing will help dollar longs.

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