Dollar rises amid global recession fear

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The U.S. dollar rose against other major currencies this week as global economic recession concerns raise risk-aversion appetite.

The Federal Reserve on Wednesday launched so-called operation twist which intends to replace 400-billion-dollar short-term debt with long-term bonds, in an effort to lower the interest rates and stimulate the economy.

However, the Fed's move was in line with investors' previous expectations and failed to lift the markets. Also, the Fed' s bleak view about the economic outlook added on the concerns about the economy. The fear about the global economic recession triggered huge sell-off in the stock markets as three major indices tumbled more than 3 percent on Thursday.

U.S. President Barack Obama laid out a new package this week that aims to cut the federal deficit by around 3.6 trillion dollar over a decade, with half coming from tax increases.

The dollar index rose 2.2 percent this week as investors fled to seek safe-haven bet.

Weak Economic growth in other countries also indicated a possible global economic recession. Germany and France' s Purchasing Manager Index (PMI) in September dipped to the lowest levels since 2009. While HSBC China Flash PMI showed China' s factory sector contracted for a third consecutive month in September.

Meanwhile, the debt crisis in the euro zone still threatened the stability of the European economy. The risk of Greek debt default is rising. Greek government said Wednesday it will suspend more civil servants than originally planned and impose new pension cuts as part of its new austerity plan. The efforts came amid speculations that Greece will default and fail to meet its austerity target.

A conference call of officials from Greece, the European Union (EU), the International Monetary Fund (IMF) and European Central Bank (ECB) on Monday came as a support for the markets. The euro dipped 2.2 percent against the dollar this week.

The fear over double-dip recession have dominated the markets. However, the job data on Thursday came as a relief. The U.S. Labor Department said initial jobless claims dropped 9,000 to 423,000 last week. But it is still too early to say the job markets have improved.

Minutes of this month' s monetary policy meeting of the Bank of England showed that the central bank decided to keep its key interest rate unchanged at 0.5 percent. The British pound tumbled more than 1 percent against the dollar. The British pound lost 2 percent against the dollar this week.

As for other currencies, the dollar gained 0.3 percent against the Japanese yen and surged 3.4 percent against the Swiss franc this week.