UPDTAES ON JULY 18 2008

JULY 18 FRIDAY

Dollar Heads for Weekly Gain as Banks Weather Credit

Turmoil .

The dollar headed for a weekly advance against the euro,

rebounding from a record low on signs U.S. investment

banks will withstand credit-market losses arising from

the nation's subprime mortgage collapse.

The U.S. currency also rose versus the pound on speculation the

U.K. government will boost borrowing as Chancellor of the

Exchequer Alistair Darling introduces new spending guidelines.

The yen was set for a weekly loss against the South African

rand as a rally in U.S. stocks following

JPMorgan Chase & Co.'s better-than-expected earnings

encouraged so-called carry trades.

The dollar rose to $1.5855 per euro at 2:28 p.m. in Tokyo

from $1.5863 late yesterday and $1.5938 at the end of

last week. It hit an all-time low of $1.6038 on July 15.

The currency was at 106.26 yen from 106.28 yen, little

changed from a week ago.

Global banks and securities firms have reported losses and

writedowns of $436 billion related to subprime loans to U.S

homeowners with poor credit, weighing on both stocks and

the nation's currency this year.

Still, cheaper oil is helping support the greenback against

the euro. Crude oil for August delivery is set for a record

weekly drop in dollar terms, having lost more than $14 a

barrel since July 11 in New York.

The euro-dollar exchange rate and oil have moved in the

same direction 90 percent of the time during the past year,

according to Bloomberg calculations based on the correlation

of their value changes.