FOREX-Cash dash has dollar set for best week since 2008 crisis

* Virus crisis sends investors to USD cash
* Dollar up 4% vs euro so far this week
* Asia trade volatile
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, March 20 (Reuters) - The dollar was headed for
its biggest weekly gain since the 2008 crisis on Friday, as the
coronavirus pandemic drives a dash for cash that is stretching
the world's financial plumbing.
Even the U.S. Federal Reserve's extension of discount dollar
funding - already available to six of the world's biggest
central banks - to nine more overnight showed only the most
tentative signs of satisfying demand for greenbacks.
In volatile trade in Asia on Friday the British pound GDP=
fell to a fresh 35-year low of $1.1414. The Aussie and kiwi
oscillated in a 1.5 cent range - eventually turning positive.
The dollar rose 0.5% against the yen to a month-high of
111.30 yen JPY= . Already thin liquidity was reduced further by
a Japanese public holiday, exacerbating sharp moves.
"World markets are still very, very nervous," said Westpac
FX analyst Imre Speizer. "People are scrambling for (cash) any
way they can," he said.
The coronavirus pandemic and the draconian quarantine
measures to slow its spread have ground global commerce nearly
to a halt, driving a huge real demand for borrowed dollars so
that idled businesses can cover costs.
At the same time, currency traders want dollar positions and
investors need cash to cover losses in the stock market, and are
liquidating everything from gold to bonds to get the dollars.
The dollar greenback has gained 4.5% against a basket of
currencies =USD this week so far, its best since 2008.
It is also on track for its largest weekly gain on the euro
in nearly a decade and its best week on most other majors since
the depths of the '08 crisis. It has gained almost 30% against
the Australian dollar AUD=D3 this year and last sat at
$0.5790.
The dollar's 20% rise against the oil-exposed Norwegian
krone NOK= over two weeks has Norway's central bank
considering intervening to support its currency, a step it has
not taken in more than 20 years.
Australia's central bank chief also raised the possibility
of FX market intervention on Thursday.
The scramble has already prompted the U.S. Federal Reserve
to allow 15 central banks around the globe to borrow dollars
cheaply against their domestic currencies.
Yet stress, which is evident in cross-currency basis swaps,
remains evident in the cost of borrowing dollars abroad and in
the week's 4% decline in the gold price.
The premium over interbank rates that investors were paying
to swap yen for one-year dollar funding JPYCBS1Y= was around
72 basis points, still close to the 2016 highs hit last week.
"Foreign borrowers with $12 trillion of dollar-denominated
debt worldwide are hoarding as many dollars as they can in order
to be able to service their debts," said Mathieu Savary,
Strategist at BCA Research.
"(At) some point, there will be enough dollar supply to calm
the markets. Gold prices are an indication that we are not there
yet."