US dollar index climbs to 12 month high

As falling oil prices and a bump in the US stocks stopped concerns about the welfare of the financial firms, the U.S. dollar climbed to a fresh one-year high against major currencies

The dollar wasn’t affected by the news that Lehman Brothers, which is the largest US investment bank, incurred a third-quarter loss.

With some banks saying that they still do business with Lehman, analysts said Lehman’s crisis should not worsen the global credit crunch.

The dollar is also in advantage from the belief that the US economy may be more lax than most economies due to global credit crunch.

"I think with all that has been happening in the U.S. financial sector, the dollar has been getting safe-haven bids," said Nick Bennenbroek, head of FX strategy, at Wells Fargo in New York. "The story on the dollar hasn't changed. It has been on a tear for the last several weeks now."

Dollar’s rise in a decade

Dollar’s largest one month rise in more than a decade was in August.

On the ICE Futures Exchange, which measures the greenback’s value against a basket of six currencies, the dollar climbed to 80.017, the highest since September last year.

Those rises came as the euro fell to a nearly 12-month drain due to the view that the euros economic growth could slow more sharply than previously expected.

The euro last traded at $1.4000 down nearly 1.0 percent on the day, while U.S. crude futures were down 0.3 percent at $103.00 per barrel.

Changing of position for investors

Analysts say that investors from US are liquidating their stand in overseas equity and bond markets and lending support to the dollar.

According to Goldman Sachs, US mutual fund data has shown persistent selling of foreign equity over the last two months. Since July the investment bank said this data has shown selling of foreign equity totaling to $18billion.