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U.S. Dollar Hits Another Low Against Euro
PostPosted: Fri Nov 26, 2004 10:00 am Reply with quote
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Associated Press
U.S. Dollar Hits Another Low Against Euro
Thursday November 25, 11:38 pm ET
By Geir Moulson, Associated Press Writer
U.S. Dollar Drops to Another New Low Against Euro, Which Tops $1.32

BERLIN (AP) -- Skeptical markets drove the U.S. dollar to another all-time low Thursday against the euro, with the European currency climbing above $1.32 for the first time.

The euro rose to a new high for a third consecutive day, breaking through Wednesday's record of $1.3178. It spiked up to $1.3237, then subsided slightly to trade at $1.3217 by late afternoon.

The current dollar slide, driven primarily by concerns over the U.S. trade and budget deficits, has taken the euro from $1.20 about two months ago. It rose above the $1.31 mark for the first time Tuesday.

While a weekend meeting of the finance officials from the Group of 20 industrial and developing countries failed to deliver any signal of concerted action to stem the tide, economists say no specific event is pushing the U.S. currency down this week.

"It's just anti-dollar sentiment," said Lee Ferridge, chief currency strategist at Rabobank in London. "The trend is continuing."

"I think it should slow before long, but we might see $1.35 before it happens," he added.

Many analysts are predicting the euro could hit $1.40 by the middle of next year, and European Central Bank President Jean-Claude Trichet recently called the rapid increase "brutal."

Still, the ECB has yet to intervene in currency markets in an effort to halt the dollar's fall. Ferridge said that, with the United States unlikely to join in such a move, he didn't expect it to do so.

"I don't think the ECB would go it alone," he said.

The U.S. dollar was at its lowest levels against the Japanese yen since December 1999 Thursday, buying 102.61 yen.

"The dollar-bearish sentiment, not only against the euro but also other currencies, remains firmly in place," said Minoru Shioiri, senior manager of foreign exchange at Mitsubishi Securities in Tokyo.

Introduced in 1999 as the common currency for 12 European countries, the euro initially dropped against the dollar but has risen some 60 percent since hitting an all-time low of 82 U.S. cents in October 2000.

The dollar's current weakness has been helpful to U.S. exports, making American products less expensive overseas, but European leaders have begun to worry openly that it might damage their fragile export-driven economic recovery.

The strong euro puts pressure on manufacturers of products like German luxury cars or French wines. Either their dollar prices will rise or the companies must live with lower profit margins.

A survey published Thursday showed that the euro's strength helped push down German business confidence in November. The closely watched Ifo index fell to 94.1 from 95.3 in October.

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PostPosted: Sat Nov 27, 2004 9:30 pm Reply with quote
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Dollar slides to a record low
China, other foreign banks show signs of disenchantment with U.S. currency


Edmund L. Andrews, New York Times
Saturday, November 27, 2004

Investors and market analysts are increasingly worried that the last big source of support for the U.S. dollar -- heavy buying by foreign central banks -- is fading.

The anxiety was on full display Friday, when the dollar abruptly slid to a record low against the euro after a report suggesting that the Chinese central bank would start to reduce its holdings in the American currency.

Though Chinese officials later denied the report, and the dollar recovered, analysts say the broader trend is that foreign governments are becoming less willing to finance the growing debt of the U.S. government.

On Tuesday, a top official with the Russian central bank said his government had become worried about the sinking value of the dollar and might switch some foreign reserves to euros.

A day later, India's central bank hinted that it was worried about the same issue and might shift reserves into other currencies.

Japan and China, which together have amassed nearly $900 billion in U.S. Treasury securities, have both slowed their buying sharply from the frenetic pace in February and March.

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U.S. Dollar Hits Another Low Against Euro
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