Dollar Gains As Trichet Seconds Bernanke

TALI ARBEL

NEW YORK (AP) — The dollar surged higher Tuesday after European Central Bank president Jean-Claude Trichet seconded Federal Reserve Chairman Ben Bernanke's support for a strong buck.

But analysts said it was likely just a blip in the greenback's downwards trend.

Meanwhile, the Treasury Department said foreigners' demand for long-term U.S. financial assets rose in September. China, the biggest foreign holder of U.S. Treasurys, added to its stock of government debt.

China, among other developing countries, has raised concerns about the value of their reserves as the dollar drops.

Their continued investment in Treasurys is crucial for funding record-high budget deficits in the U.S.

On Tuesday morning in New York, the 16-nation euro fell to $1.4838 from $1.4987 late Monday, while the British pound dropped to $1.6788 from $1.6836. The dollar rose to 89.42 Japanese yen from 88.98 yen.

On Monday, the greenback hit a 15-month low against a basket of six currencies despite Bernanke's rare comment on the dollar. In a speech in New York, he said the central bank was following foreign exchange markets closely. The Fed's policies and the "underlying strengths" of the U.S. economy would "help ensure that the dollar is strong and a source of global financial stability."