Euro Declines

The euro stayed lower against the dollar after the European Central Bank lowered interest rates by the most in its history to boost the economy.

The single currency fell most versus the Japanese yen amid speculation the central bank will signal today further cuts are needed to buoy the recession-mired economy. Policy makers reduced the key refinancing rate by three-quarters of a percentage point to 2.50 percent, the second cut in a month. The reduction follows cuts in the U.K., Sweden and New Zealand today as central banks act to stem the global economic slowdown.

The euro fell to $1.2622 at 7:52 a.m. in New York, from $1.2717 yesterday. It reached $1.2563 on Dec. 2, the lowest level since Nov. 21. The 15-nation currency weakened to 117.20 yen, from 118.64.

The pound traded near to an all-time low against the euro and close to its weakest since 2002 versus the dollar as the Bank of England cut its main interest rate to 2 percent from 3 percent today, the lowest level since 1951, to stave off the ravages of the credit crisis. U.K. house prices fell the most since 1992 in November as banks curtailed credit, HBOS Plc said today.

The yen rose against the euro on speculation the deepening global slowdown spurred investors to sell higher-yielding assets financed by borrowing in Japan. Investors have been reducing carry trades, in which they get funds in a country with low borrowing costs and invest in one with higher interest rates.

Japan’s benchmark rate of 0.3 percent compares with 4.25 percent in Australia and 5 percent in New Zealand.

New Zealand’s dollar fell 0.1 percent to 53.18 U.S. cents and 0.5 percent to 49.40 yen from late in New York, following the central bank’s rate reduction today.

Sweden’s krona fell close to a record low against the euro as the Riksbank cut the benchmark interest rate by the most in 16 years to revive the ailing economy.

The yuan traded at 6.8837 per dollar, near a five-month low, on speculation U.S. Treasury Secretary Henry Paulson’s calls for a stronger yuan during a Beijing visit this week won’t stop China from weakening its currency to support exporters.,
12/4/2008 5:32:08 AM