BUZZ-COMMENT-No wonder a safe and rewarding dollar is rising

Jan 30 (Reuters) - The dollar as the world reserve currency is safe and it is supported by a relatively high interest rate that rewards those invested in this extremely liquid asset while they hold it.

That the dollar is very liquid is important as those who own dollars know they can exchange it quickly with very little difficulty.

One of the key factors that make a dollar rise more likely is the lack of speculation that it will add to the gains that saw it reach an 18-year high last month.

Without the restraint of speculation the dollar is freer to rise and the lack of betting could be an indication that investment in it is also not overly restrictive.

At a time when the policies of a new U.S. president are causing a lot of uncertainty, the dollar seems an ideal asset to hold, unlike other presumed safe assets such as the yen and the Swiss franc, which are undermined by central banks' policies.

Unlike the dollar which pay investors who hold it, it costs them to hold gold which has also soared in value. Gold's surge is additional cause to adopt a defensive position in the dollar, while illiquid emerging currencies have plummeted, increasing demand for the safety offered by the greenback.

The euro, which plays second fiddle to the dollar among reserve currencies, is being undermined by monetary policy in the eurozone that could result in a slide below parity.

On top of this, the technical backdrop for the dollar is extremely bullish, with potential for the uptrend that has endured since 2011 to extend further in a year when it may pay to play safe.

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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

((jeremy.boulton@thomsonreuters.com))