Euro Falls to 13-Month Low Versus Dollar


The euro fell to a 13-month low against the dollar and the weakest in two years versus the yen after European Central Bank President Jean-Claude Trichet said policy makers discussed cutting interest rates as economic growth slows.

The European single currency dropped for the fourth day against the dollar as Trichet said recent data suggests ``increased downside risks'' to growth. The ECB kept its main rate at 4.25 percent today, a seven-year high.

The euro declined to $1.380 at 3:53 p.m. in New York, from $1.4009 yesterday. It touched $1.3748, the weakest level since Sept. 7, 2007. The euro fell to 145.17 yen, from 148.11 yen, reaching 145.19, the lowest level since July 11, 2006. The U.S. currency traded at 105.2 yen, from 105.71 yen.

Declines in the euro reduce the likelihood of coordinated action by central banks to support the dollar, which has dropped more than 17 percent against the 15-nation currency in the past five years. The euro has slid 5.8 percent this week, the biggest four-day drop since the currency's debut in 1999.

It may also help European exporters such as Fiat SpA, Volkswagen AG and Airbus SAS just as the region heads toward a recession. French Finance Minister Christine Lagarde said Sept. 11 she welcomed the euro's decline to below $1.40.

The pound fell to the lowest level in three weeks against the dollar after house prices dropped in September by the most since at least 1991, giving the Bank of England more reason to lower interest rates to avert a recession. The U.K. currency dropped to $1.762 by 4:03 p.m. in New York, from $1.7697 yesterday, and traded as low as $1.7552, the weakest since Sept. 12. The currency rose to 78.30 pence per euro, from 79.15 pence yesterday.

Brazil's real tumbled to a 13-month low on concern slowing global economic growth will curb demand for local exports and financial assets. The real slumped 1.38 percent to 2.021 per dollar at 3:58 p.m. New York time from 1.9176 yesterday. The real has slid almost 10 percent this week.

The Australian dollar fell for the seventh day and New Zealand's declined as investors sold higher- yielding assets on concern the U.S. bailout won't stop the world's biggest economy sliding into recession. The currencies also fell against the yen as U.S. manufacturing contracted in September at the fastest pace since the last recession, signaling global economic growth will slow

The Australian dollar fell 0.25 percent to 77.20 U.S. cents as of 4:08 p.m. in New York from 80.05 cents in late Asian trading yesterday. New Zealand's dollar weakened 0.6 percent to 65.8 U.S. cents from 67.77 cents.


TradingEconomics.com, Bloomberg.com
10/2/2008 1:16:26 PM