Investors seek dollar safety

Click the chart to track the latest exchange rates.

'Banks must be nationalized'

More Videos

NEW YORK (CNNMoney.com) -- The dollar rose against major currencies Thursday as investors uncertain of the effectiveness of the government's economic recovery plans sought safety in U.S. cash.

The 15-nation euro fell 0.5 cents, or 0.4% to $1.2855 against the dollar, while the British pound fell 1.5 cents, or 1.07% to $1.4242. The dollar also rose ¥0.592, or 0.65%, to ¥90.993 against the Japanese yen.

Both houses of Congress reached a deal Wednesday on an $789 billion stimulus bill. Votes on the plan are expected by week's end, and the measure could reach President Obama's desk for signing next week.

Earlier this week, Treasury Secretary Tim Geithner unveiled the Obama administration's plan to revitalize the banking sector, however, the plan has been criticized for being short on details. Some lawmakers have argued that the plan does not go far enough.

Investors are unsure about how effective these plans will be in getting the U.S. economy on track, according to John Kicklighter, currency strategist at currency-trading firm Forex Capital Markets.

"They're trying to preserve funds rather than look for returns," he said.

Senate Budget Committee Chairman Kent Conrad, D-N.D., warned Wednesday that the price tag on government's efforts to revitalize the economy could end up as high as $10 trillion dollars.

What the U.S. does to boost its economy is of particular importance because other nations may follow suit if it pays off, according to Kicklighter.

Countries around the world are in crisis mode. European Central Bank Vice President Lucas Papademos suggested in a speech in London late Wednesday that the central bank of Europe could cut its key interest rate to a record low when it meets next month.

"A further easing of monetary policy may be appropriate," he said, according to Reuters.

Investors were also weighing the possibility of further reductions of a key interest rate from the Bank of England after Governor Mervyn King said the island kingdom was in the middle of a "deep recession," according to Reuters.

Investors will be looking closely to see who's economy is closer to recovery, said Kicklighter. For example, if Europe finds that the recession there is not as deep as was supposed, then investors will likely flock to the euro, he said.