US Dollar Goes Up on A Floater as Pres. Election Time Nears

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Oct. 21 (Bloomberg) -- The dollar traded near an 18-month high against the euro after U.S. Federal Reserve Chairman Ben S. Bernanke endorsed additional fiscal stimulus to avert a prolonged recession.

The greenback was also close to its strongest in a week versus the yen after the White House said it may support such measures, having previously refrained from supporting plans to add to a $168 billion package approved in February.

``An additional stimulus package will support the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``This shows that U.S. officials are prepared to go far to limit damage to the economy.''

The dollar traded at $1.3321 as of 10:27 a.m. in Tokyo from $1.3344 late yesterday in New York. It reached $1.3259 on Oct. 10, the strongest since March 2007. The U.S. currency was at 101.80 yen from 101.86 yen. The yen traded at 135.59 per euro from 135.92. The dollar may rise to $1.3285 today, Soma said.

Lawmakers should consider ``measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,'' Bernanke said in testimony to the House Budget Committee yesterday. Within an hour of the conclusion of Bernanke's testimony, White House Press Secretary Dana Perino said officials are ``open'' to the idea of a new plan and would ``look carefully'' at suggestions.

The dollar has gained 20 percent since touching a record low of $1.6038 per euro on July 15 on speculation the greenback will benefit as the European economy slows.

Weaker Euro

Traders expect the European Central Bank to lower borrowing costs further after cutting the main refinancing rate by half a percentage point to 3.75 percent on Oct. 8 as part of coordinated reductions by major central banks. The implied yield on the three-month Euribor contract expiring in March fell to 3.41 percent yesterday, the lowest level in seven months. The yield has been 0.23 percentage point higher than the benchmark rate on average over the past year.

``Concerns over a European economic downturn are intensifying,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank AG in Tokyo. ``An ECB rate cut is possible. The euro is becoming a very weak currency.''

The euro may decline to $1.3280 and 135.30 yen today, he said.