Obama’s spending bonanza lifts dollar

Investors today welcomed Barack Obama's plans for a multi-billion-dollar stimulus package to revive the US economy as the President-elect met congressional leaders to discuss the plan.

The dollar soared against the euro and the yen amid hopes the package will help the US economy recover from recession.

Obama's "American Recovery and Reinvestment Plan", which includes a series of tax cuts for businesses and households, could be worth more than $800 billion (£552 billion), including $300 billion in tax breaks.

Nariman Behravesh, US chief economist at IHS Global Insight, said today "This is exactly what is needed to kick-start the US economy.

"The dilemma is how to get money into the economy as quickly as possible, thus the need for tax cuts. Infrastructure spending tends to have a bigger bang per buck, but it takes a while to get going."