By Mark Tannenbaum
New York, Nov. 14 (Bloomberg) -- The dollar reached a three- month high against the euro after opposition forces took control of half of Afghanistan, raising hopes the conflict there is nearing an end.
The U.S. currency touched the day's best levels after a report showed retail sales in the U.S. rose a record 7.1 percent in October, boosting optimism a rebound is imminent in the world's biggest economy.
Investors believe ``the U.S. still, even after everything that's happened, represents the best investment opportunity,'' said Lara Rhame, a currency economist at Brown Brothers Harriman & Co. As traders sell the Swiss franc and other currencies they piled into in the weeks after the Sept. 11 terrorist attacks, ``all of that money seems to be coming into the U.S.''
The U.S. currency rose to 87.91 cents per euro, from 88.10 in New York late yesterday, and reached the strongest since Aug. 8. The dollar climbed to 121.78 yen, from 121.57.
A victory by Afghanistan's Northern Alliance may reduce the threat of more terrorist attacks on the U.S., and renew focus on the potential for Federal Reserve interest-rate cuts and government growth-boosting measures to help the U.S. emerge first from a global economic slump, said investors.
``The dollar has been boosted by the good news out of Afghanistan,'' said Neill Nuttall, who helps run $60 billion in foreign exchange at J.P. Morgan Investment Management in London. There has also been ``a more impressive policy response, both monetary and fiscal, from the U.S.'' to spur growth.
Earlier dollar gains came as Afghan opposition forces seized more ground today, including the airport in Kandahar, headquarters of Taliban leader Mullah Mohammad Omar, the Associated Press reported.
The Taliban's retreat yesterday from the capital Kabul was the biggest victory in the campaign to oust the Taliban and capture Osama bin Laden, the U.S.'s chief suspect in the Sept. 11 attacks on New York and Washington.
The dollar also got support from prospects for gains in U.S. stocks. Futures on major U.S. stock indexes pointed to a rally at the open of trading today, extending yesterday's advance.