US Dollar hits another record low

[peejay 327]

Dollar hits another record low

Associated Press

BERLIN — The dollar hit a new low against the euro in thin trading today as speculation continued that the American credit crisis will lead to another cut in interest rates in the U.S.

The shared 13-nation euro spiked early to hit $1.4966, breaking the previous record of $1.4873, set the day before.

"Once again the message that is coming through is that with further rate cuts expected from the Fed, the dollar is struggling to find any serious supporters," said James Hughes, an analyst at CMC Markets.

In afternoon European trading, the euro had retreated to $1.4803, down from the $1.4833 it bought late in Europe the day before.

The dollar fell to purchase as little as 107.56 Japanese yen, dropping below the 108-yen level for the first time since 2005. It recovered slightly to purchase 108.3 yen, down slightly from 108.62 yen late in Europe on Thursday.

The British pound, meanwhile, fell to $2.0547 from $2.0634 the day before.

The Thanksgiving holiday weekend kept many players on the sidelines, while Japanese financial markets were closed Friday for the Labor Thanksgiving Day holiday.

The euro, the pound and other currencies have been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.

The euro is on track to trade in a $1.50 to $1.60 range over the coming months, Norbert Walter, chief economist at Deutsche Bank, told Dow Jones Newswires on the fringes of the European Banking Congress.

In that range, it is overvalued by about 30 percent, he said.

Earlier in the day, Commerzbank AG Chief Executive Klaus Peter Mueller said he expected the euro to trade in the $1.50 to $1.60 range over the next 12 months.

The dollar has been further weakened by interest rate cuts, which can be used to jump-start an economy, but can also weaken a currency as investors transfer funds to countries where they can earn higher returns.

The Federal Reserve has already cut rates twice and speculation is growing that as the subprime fallout continues, it will be forced into another cut.

The euro has been hitting new highs daily for the past week, and has started to raise concern among European businesses and governments.

German Chancellor Angela Merkel told N24 television on Thursday that the strong euro and high oil prices pose a risk to the country's economy — Europe's largest.

"We are pleased that Europe has a strong currency, but this obviously also creates problems for exports," she said.

http://www.chron.com/disp/story.mpl/headli...iz/5323939.html

[jundp 191]

This does not bode well economically speaking for my Christmas trip to London and Ulm.

Damn.