Dollar rises on Bernanke comments

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A sharp drop in New York crude oil futures, as well as comments by a top Fed policy-maker that it made "eminent sense" to raise U.S. interest rates as risks to the world's largest economy ebbed, also supported the greenback, analysts said.

"Bernanke's comments should take some pressure off from the financially strapped Wall Street, they helped stocks early on. The lower oil price is the other part of the story helping the dollar," said Paresh Upadhyaya, portfolio manager at Putnam Investments in Boston.

Bernanke's remarks came on the heels of renewed credit worries sparked by a Lehman Brothers report that an accounting change could force Fannie Mae and Freddie Mac to raise a combined $75 billion (38 billion pounds) in capital.

Fannie Mae and Freddie Mac are the largest providers of funding for U.S. home mortgages. But the Office of Federal Housing Enterprise Oversight, their federal regulator, said on Tuesday the proposed accounting change should not spur capital changes at the two government-sponsored agencies.

The New York Board of Trade's dollar index .DXY, which charts the dollar's performance against a basket of six currencies, rose to a session peak of 73.082.

The euro fell as low as $1.5636, according to Reuters data and was last trading at $1.5650, down 0.5 percent.

LOWER OIL PRICES BOOST

"The dollar's gains are primarily on the back of stabilization in the stock markets and also on much lower oil price, but we are not seeing a tremendous improvement in the dollar versus euro," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago.

"Some of the risk taking that was taken out on concerns over Freddie Mae and Fannie Mae, i.e., buying of yen and of Swiss franc against other currencies has gone away."

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