Dollar climbs as risk appetite dissolves

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NEW YORK (CNNMoney.com) -- The U.S. dollar rose against the euro and the pound Thursday, but fell back below ¥100 as investor's appetite for risk was ruined by falling stock prices.

The 15-nation euro bought $1.3634, down from $1.3677 late Wednesday in New York. And the British pound slipped to $1.7183 from $1.7289.

The dollar was under pressure earlier in the session as European stock markets rebounded. But the buck started to gain ground against the euro and the pound after the U.S. stock market slumped.

"Now that stocks are down, it's generating some renewed interest in the dollar as a risk aversion trade," said Asharf Liadi, Chief FX Strategist at CMC Markets in New York. "The correlation between stocks and currencies remains in place."

Despite the economic turmoil in the U.S. economy, the dollar is still seen as a relatively safe haven by many currency traders. Hence, when stock prices fall, the greenback often rallies against the higher-yielding euro and pound.

But the dollar remained weak against the lower-yielding yen. The U.S. currency fell to ¥99.96 versus ¥101.12 in the previous session. The dollar had previously fallen to ¥99.73 at noon on Wednesday.

The dollar's advance comes one day after central banks in Europe and North America collectively lowered interest rates in an attempt to stabilize shaky financial markets.

While the emergency rate cuts were a necessary step towards reestablishing confidence in world markets, the depth of the problems facing the global economy mean that their impact on the market "may not be felt for some time," Liadi said.