US Fed extends dollar lifeline for central banks

The US Federal Reserve on Tuesday extended until August an emergency tool for other central banks to access dollars, amid market jitters and high demand for the safe haven greenback. The deal, which had been due to expire in January, allows the central banks of Britain, Japan, Canada and Switzerland, as well as the European Central Bank, to exchange local currency for dollars.
The swap agreements were sealed in May, but as a debt crisis and slow economic recovery continues to roil markets and put pressure on the euro, the Fed said the temporary facility would be extended. The so-called swap lines were set up during the 2008 financial crisis, as European and Japanese banks struggled to access dollars. The dollar is usually seen as a safe haven in times of crisis, raising the costs of European or Asian banks who are meeting contracts in dollars. The Japanese and European banks will be able to borrow dollars up to an unlimited amount. Canada's lending will be capped at 30 billion dollars.