View Full Version : Dollar Hits New Low Against Euro Amid Warnings From Europe

11-22-2007, 09:33 PM
Dollar hits new low against euro amid warnings from Europe


Published: Thursday November 22, 2007

The dollar hit a new record low against the euro on Thursday, provoking more worries in the eurozone about the impact of the soaring European currency.

Europe's single currency stuck a record peak of 1.4875 dollars in Asian trading hours -- the highest level since the euro's creation in 1999.

Later in European trade, the euro stood at 1.4850 dollars, compared with 1.4854 in New York late on Wednesday. US markets were shut Thursday owing to the Thanksgiving national holiday.

The dollar also hit an all-time low against the Swiss franc, which is viewed as a haven in troubled times for the global economy. The US unit fell to a record low of 1.1005 Swiss francs.

Markets were still digesting Tuesday's downbeat US growth forecasts from the Federal Reserve. The economic expectations have weighed heavily on the dollar, despite the Fed insisting it has no plans to cut US interest rates again in the coming months.

"With investors still exploring the extent and duration of the US economic downturn, it is no surprise markets are not subscribing to the idea the Fed is reluctant to cut too far," said Gavin Friend, currency analyst at Commerzbank.

The Federal Open Market Committee slashed its base federal funds rate by a half-point to 4.75 percent on September 18. It was the central bank's first rate cut in four years.

That rate cut, and a subsequent quarter-point reduction to 4.50 percent on October 31, were taken to ease a credit crunch related to the US housing slump.

German Chancellor Angela Merkel said Thursday that the euro's record levels against other major currencies "naturally poses problems" for exporters, the traditional engine of German growth.

"We are happy of course to have a solid currency. But for exports it naturally poses problems," Merkel told television news channel N24.

Earlier Thursday, the German head of European plane maker Airbus, Thomas Enders, said the group might have to take new cost-cutting measures to counter the euro's rise against the dollar, which he said had "exceeded tolerable limits."

Airbus expects "enormous losses" from foreign exchange effects, Enders said.

The dollar was also suffering from growing speculation that overseas investors may diversify from the US unit and turn increasingly to the euro.

The euro has "benefited from heightening expectations that Gulf Arab states and Saudi Arabia will revalue their currencies and introduce a basket to replace the dollar peg," said NAB Capital strategist John Kyriakopoulos.

Saudi newspaper al-Riyadh reported that Saudi Arabia may have started considering a revaluation of its riyal against the dollar ahead of a meeting of heads of Gulf Arab states in early December.

Elsewhere, market participants were worried the greenback could go into free-fall against the Japanese unit, even to the 105-yen level, dealers said.

But they do not expect the Japanese central bank to intervene in the near term to rein in the stronger yen, which is hurting Japanese exporters.

"There is no longer any emotional attachment nor aversion against the yen's appreciation among Japanese politicians and corporate executives which we saw a few years ago," said Toru Umemoto, chief forex strategist at Barclays Capital.

The US central bank on Wednesday trimmed back its growth projections citing weakness in housing and tighter credit conditions.

The Fed projected growth next year in a range of 1.8 to 2.5 percent, down from a prior forecast of 2.5 to 2.75 percent.

In late European trade Thursday, the euro changed hands at 1.4850 dollars, against 1.4854 late on Wednesday, at 161.10 yen (161.02), 0.7208 pounds (0.7190) and 1.6358 Swiss francs (1.6366).

The dollar stood at 108.49 yen (108.38) and 1.1016 Swiss francs (1.1016).

The pound was at 2.0600 dollars (2.0650).

In London, the price of gold rose to 803.25 dollars per ounce from 798 dollars late on Wednesday.

11-22-2007, 09:36 PM

11-22-2007, 09:36 PM
I'll bet the Amero doesn't say God anywhere on it.

11-22-2007, 09:42 PM
I'll bet the Amero doesn't say God anywhere on it.


11-22-2007, 09:43 PM

11-22-2007, 09:44 PM

11-22-2007, 09:45 PM