Dollar hits fresh record low against euro

Dollar hits fresh record low against euro
AFP
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First Published: Fri, Nov 23 2007. 04 11 PM IST
Updated: Fri, Nov 23 2007. 04 11 PM IST
Singapore: The dollar hit a new record low against the euro on Friday in a market worried over lower forecasts for US growth, dealers said.
Europe’s single currency struck a new record peak of $1.4922 in morning Asian trade, up from the previous record of 1.4875 reached Thursday. The unit was created in 1999.
In late New York trades on Wednesday the euro was at 1.4854 before US markets closed for the Thanksgiving holiday on Thursday.
“Obviously it’s under pressure at the moment,” Callum Henderson, head of forex strategy at Standard Chartered, said of the greenback.
The dollar fell to 108.03 yen, from 108.38.
“Dollar-yen is also lower on the back of everything else,” Henderson said.
Markets have been digesting Tuesday’s downbeat US growth forecasts from the Federal Reserve. The economic expectations have weighed heavily on the dollar, despite the Fed’s insisting it has no plans to cut US interest rates again in the coming months.
Trimming its growth forecast, the US central bank cited weakness in housing and tighter credit conditions, which emerged over the summer from a deterioration in the high-risk subprime loan market.
The Federal Reserve projected growth next year in a range of 1.8 to 2.5%, down from a prior forecast of 2.5 to 2.75%.
German Chancellor Angela Merkel said Thursday that the euro’s record levels against other major currencies “naturally poses problems” for exporters, the traditional engine of German growth.
Earlier Thursday, the German head of European plane maker Airbus, Thomas Enders, said the group might have to take new cost-cutting measures to counter the euro’s rise against the dollar, which he said had “exceeded tolerable limits.”
The dollar has also been suffering from growing speculation that overseas investors may diversify from the US unit and turn increasingly to the euro.
Market participants were worried the greenback could go into free-fall against the yen, even to the 105-yen level, dealers said.
But Henderson expressed doubt over its reaching 105. He pointed out that the dollar has already fallen quite some way, from above 117 in mid-October.
Dealers said they do not expect the Japanese central bank to intervene in the near term to rein in the stronger yen, which is hurting Japanese exporters.
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First Published: Fri, Nov 23 2007. 04 11 PM IST
More Topics: Forex | Asia | Dollar | Euro | Rupee |