* Dollar buoyed as investors shun risk
* Treasury Secretary nominee Geithner wants strong dollar
* Traders alert to possible currency intervention
(Recasts; adds comments, changes byline)
By Vivianne Rodrigues
NEW YORK, Jan 22 (Reuters) - The U.S. dollar rose on
Thursday bolstered by its safe-haven status and comments by
Treasury Secretary nominee Timothy Geithner, who said a strong
dollar is in the United States' interest.
The Senate Finance Committee on Thursday backed Geithner,
President Barack Obama's nominee to head the U.S. Treasury,
clearing the way for a full confirmation vote in the Senate.
For details, see []
Geithner's comments came against the backdrop of ongoing
investor concerns about the health of the global economy with
sterling still pressured by Britain's banking and economic
woes.
Currency markets were also buffeted by poor U.S. economic
data and speculation of currency market intervention.
But the dollar weakened against the yen after a report
showed a larger-than-expected increase in the number of U.S.
workers filing claims for jobless benefits. []
Yen gains were limited by investors on alert for possible
Bank of Japan intervention after Swiss officials issued similar
warnings on Wednesday. The yen is near a 13-1/2-year peak
against the dollar and hit a seven-year high against the euro
on Wednesday.
A strong dollar "provides an anchor to continue attracting
capital to pay for all this deficit spending that's going to
occur, and when the economy starts to recover, it will help
keep inflation under control," said Greg Salvaggio, vice
president of trading at Tempus Consulting in Washington.
In late New York trading, the euro was down 0.2 percent
against the dollar to $1.3014 <EUR=>. The euro dropped 1
percent to 115.36 yen <EURJPY=>, falling back toward the
seven-year trough plumbed on Wednesday.
The dollar was down 0.9 percent at 88.62 yen <JPY=>, but
off Wednesday's low of 87.10, its lowest since July 1995.
Sterling dropped 0.6 percent to $1.3901 <GBP=>, not far
from the low of $1.3622 set on Wednesday, its lowest since
1985. The euro gained 0.3 percent against the troubled UK
currency to 93.62 pence <EURGBP=>.
The pound has come under severe pressure this week as a
government rescue package for struggling British banks failed
to reassure investors or stem losses in banking stocks.
"There's a race to the bottom taking place among some major
currencies and the UK seems to be leading the way," said
Samarjit Shanker, a director for global strategy at the Bank of
New York Mellon, in Boston.
STRONG DOLLAR
In other U.S. data, new U.S. housing starts and permits
tumbled to a record low in December, accelerating a downward
spiral. []
"On balance, the dollar is not expected to fall too much
because the market has been bracing for dismal news anyway,"
said Omer Esiner, senior market analyst at Ruesch International
in Washington. "Bad news out of the euro zone and Japan has
benefited the dollar and that should continue despite bad U.S.
economic data."
Euro sentiment has been dented by three sovereign ratings
downgrades of euro-zone countries within a week. S&P cut
Portugal's sovereign rating on Wednesday after earlier
downgrading Spain and Greece.
There are also major concerns about the deteriorating state
of UK public finances and how the government will fund huge
bailout packages when it is already running a large fiscal
deficit, just as a weakening economy dents tax receipts.
In Japan, authorities have repeated their mantra that they
were watching currency moves closely, but refrained from
commenting on yen-selling intervention. []
"The risk of yen intervention is increasing, but even if
they (the Japanese authorities) do intervene they won't be able
to reverse the trend," said BTM-UFJ currency economist Lee
Hardman in London.
(Additional reporting by Nick Olivari, Gertrude
Chavez-Dreyfuss and Steven C. Johnson in New York; editing by
Gary Crosse)
