Dollar hits record low against euro

Source: Exec Digital Canada

Date :08/11/2007 09:19:55

The dollar was further weakened yesterday, slipping to a fresh historic low against the euro as well as tumbling to further lows against a handful of other currencies.

The 13-nation euro traded at $1.473 1in morning European trading before slipping back to $1.469, well above the $1.4555 in New York late Tuesday.

Against the British pound, the dollar hit a new 26-year low, with the sterling hitting 2.10 dollars, the highest level since 1981.

The greenback has also hit an all-time low against the Australian dollar and a multi-decade trough against the Canadian dollar. It has fallen to a nearly three-year low against the Swiss franc and at an all-time low against the Chinese yuan.

Diversifying reserves

The dollar was further hurt by comments by a Chinese official suggesting that China may diversify its reserves away from the US unit, analysts said.

Cheng Siwei, the vice chairman of China's national parliament, reportedly said at a conference in China that his country should adjust the structure of its foreign exchange reserves, the world's largest, suggesting that strong currencies ought to be given greater weight.

Rate speculation

The U.S. currency has also suffered from speculation that the Federal Reserve may continue to cut interest rates in early December even as Europe hold or raise their rates.

The Fed last week cut its base federal funds rate by a quarter-point to 4.50 percent to ease tight credit stemming from a housing slump.

There is also talk that the European Central Bank may raise interest rates on Thursday even though most analysts expect it to leave monetary policy unchanged for now.

November 8, 2007