Dollar Falls to Record


The dollar fell to a record low against the euro, as a cooling labor market and slowing economy fueled bets the Federal Reserve will cut interest rates at least twice more.

The U.S. currency also approached a 2 1/2-year low versus the yen and dropped to a record against the Swiss franc, deepening its losses after Fed Chairman Ben S. Bernanke said it was ``fair'' to say it was tougher for the bank to respond now than to the recession of 2001.

The U.S. currency touched $1.5229 per euro, the weakest since the euro began trading at about $1.17 in January 1999. The dollar was at $1.5213 at 4 p.m. in New York, from $1.5120 yesterday. The dollar fell to 105.34 yen from 106.49, touching the lowest since Jan. 23, when it reached a 2 1/2-year low of 104.97 yen. The dollar fell as low as 1.0485 francs.

The currency's three-day slide is its steepest since January 2004. It extended its slump today as the government said initial jobless claims rose 19,000 to 373,000 in the week to Feb. 23. The U.S. grew at an annual rate of 0.6 percent last quarter, from 4.9 percent the prior three months, the government also said. The median forecast in a Bloomberg survey was for growth of 0.8 percent last quarter.

The U.S. currency has dropped 13 percent versus the euro in the past year as subprime-mortgage losses, the worst housing market in 25 years and soaring credit costs spurred the Fed to cut rates five times since September. The U.S. Dollar Index, which tracks the currency against six major counterparts, touched 73.63, the lowest since its start in 1973. The index is traded on ICE Futures in New York.


TradingEconomics.com, Bloomberg
2/28/2008 1:57:07 PM