NEW YORK, Dec 20: The dollar stormed back on Friday from steep losses on the euro earlier in the week after a massive rescue announced for two of the Big Three US automakers eased worries about the world’s biggest economy.

The euro sank to 1.3913 dollars, down sharply from 1.4268 dollars a day earlier.

The greenback held nearly steady against the Japanese currency at 89.32 yen from 89.48 on Thursday.

The dollar was helped by US officials announcing a $13.4 billion rescue loan for General Motors and Chrysler, requiring tough reforms, in a move aimed at staving off an economic calamity.

The carmaker bailout will be positive for the dollar in the short term,”said Geoff Kendrick, a currency strategist at UBS in London.

The yen held up despite the Bank of Japan saying it was cutting the benchmark rate of borrowing from 0.3 per cent to 0.1 per cent, following a wave of global interest rate cuts.

Japanese leaders had supported a rate cut, partly in hopes that it would bring down the yen, which soared to a 13-year high against the greenback this week. But dealers said the cut was largely symbolic as rates were already low.

Heading into next week, I can’t see a big change in the trend of a stronger yen against the dollar, said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust and Banking Corp.

This week, the dollar has taken a beating from both the yen and the euro after the US Federal Reserve slashed interest rates to a range of zero to 0.25 per cent in a bid to reverse the dire economic situation.

The euro reached $1.4719 on Thursday, which was the highest point since September 25.The single currency was also undermined Friday by news that German producer prices fell by 1.5 per cent in November from the previous month, the biggest monthly drop since the data was first compiled in 1949.

This is good news for the country’s economy, however the question remains how quickly such a measure can be passed and implemented after the new president takes office as the US economy cannot afford to wait too long for such stimulatory measures, he said.

In late New York trade, the dollar stood at 1.1035 Swiss francs after 1.0817 Thursday.

The pound was at 1.4923 dollars from 1.5016.—AFP