Dollar Falls to Record Low Versus Euro as Bets on Fed Cut Mount


The dollar fell to a record low against the euro on signs climbing oil prices and a slump in housing are hurting U.S. consumer confidence, bolstering the case for the Federal Reserve to cut interest rates again.

The U.S. currency posted a third straight weekly drop versus the euro on speculation the housing recession will erode corporate earnings. Countrywide Financial Corp., the biggest U.S. mortgage lender, reported its first quarterly loss in 25 years as borrowers defaulted.

The dollar traded at an all-tome low of $1.4394 per euro at 4:38 p.m. in New York, from $1.4324 late yesterday. It declined against 15 of the 16 major currencies this week, falling 4.5 percent against South Africa's rand. Ruskin said the dollar may reach $1.50 per euro in March.

The dollar has dropped against all of the 16 most-actively traded currencies this year. The U.S. Dollar Index, measuring its performance against its six major peers, has lost 8 percent in 2007 and set a record low of 76.977 today.

Sales of previously owned homes fell last month by almost twice as much as economists forecast, while the median price dropped the most in almost a year, statistics from the National Association of Realtors showed this week.

Politicians including French President Nicolas Sarkozy have said exports from the $10 trillion euro-region economy may suffer as the euro gains. At the same time, the cheaper dollar has buoyed U.S. exports. The nation's trade deficit in August dropped to $57.6 billion, the narrowest since January, the Commerce Department said Oct. 11.

 


Bloomberg
10/26/2007 1:54:53 PM