FOREX-Dollar firms on view credit crisis nearing end

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The dollar climbed to a seven-week peak against the yen and moved further away from a record low versus the euro on Friday after Citigroup's results sparked hope that the worst of the credit crisis has passed.

Troubles at U.S. financial firms have been triggered by weakness in the housing market, but Citigroup's earnings have tempered worries about the sector and boosted risk appetite, enhancing the dollar's appeal.

Citigroup Inc (C.N: Quote, Profile, Research), the largest U.S. bank, posted a quarterly loss of $5.1 billion and pretax write-downs of $6.0 billion. For more see [nWNAS8367]. But shares in the company rose as investors were appeased by efforts being made to get past its credit problems and drive down costs.

"There's a prevailing sentiment that we're getting past the worst and it's a sentiment that is growing and driving some improvement in the dollar," said Nick Bennenbroek, head of FX strategy at Wells Fargo in New York.

In late afternoon trading, the dollar rose 1.1 percent to against the yen to 103.67 yen <JPY=>, after reaching its strongest since late February at 104.64 yen. At current prices, the dollar's gains versus the yen were the most in nearly three weeks.

Against the Swiss franc, the dollar rose to a five-week high at 1.0283 francs <CHF=> and last traded at 1.0172, up more than 1 percent from late on Thursday, posting its largest daily increase versus the franc since April 1.

The dollar index was trading at 72.002 .DXY, up 0.6 percent on the day.

But despite the dollar's gains, analysts cautioned that although U.S. bank earnings this quarter have not been as dreary as some had expected, there are still indications the credit crisis is far from over.