Sunday, November 18, 2007

Dollar continues near record lows

Dollar continues near record lows

The US dollar has remained weak against both the euro and the yen in Monday trading as worries about the strength of the US economy continue.
The dollar fell to $1.4687 against the euro in Asian trade, and dropped to 110.59 yen.

At the start of November, the dollar hit a record low of $1.4752 against the single European currency.

The strength of the dollar had been undermined further by weak US economic data released on Friday.

Interest rate cuts

As a growing number of US banks reveal their exposure to bad US mortgage debt, data on Friday showed the biggest drop in American industrial production since January.

Taken together, analysts say this suggests further cuts in US interest rates.

"There are no fundamental reasons to buy the dollar," said Tsutomu Soma, senior manager of foreign securities at Okasan Securities.

The US Federal Reserve last cut interest rates in October to 4.5%, in an effort to kick-start the faltering housing and credit markets, as well as making borrowing cheaper to encourage consumer spending in the run-up to the key Christmas shopping period.

It has signalled that it will adopt a wait-and-see approach to the future direction of interest rates.


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