Dollar climbs two-year peaks, risk stays in focus

Forex dollar scales two-year peak versus basket of currencies, Euro slumps to two-year low against dollar.

The dollar climbed to a fresh two-year high versus the euro and a basket of currencies in choppy trade on Thursday as investors nervous of a severe global recession kept their faith in reserve currencies.

A brief rise in stocks on Wall Street and aggressive dollar selling by the Brazilian central bank helped to lend some stability to emerging market currencies, limiting the dollar's upward momentum, analysts said.

Emerging market currencies have borne the brunt of the global financial crisis as U.S.-based investors offloaded assets in developing markets and repatriated the money.

Analysts were skeptical that the calm would be sustainable, with investors remaining wary of a sharp global economic downturn and a poor profit outlook for corporations.

"The Brazilian central bank intervened materially and bought reals against the dollar ... that seems to have calmed the price action, not only in the G10, but global currencies as well,