Dollar Sinks Ahead of Income Reports
February 29, 2008 by Philip Dru
BERLIN (AP) — The dollar struck another record low Friday in Europe as comments from the U.S. Federal reserve chief appeared to instill little confidence.Uncertainty over the U.S. economy continued to drag on the dollar a day after Fed chief Ben Bernanke said the American economy was not “anywhere near” the dangerous situation of the 1970s.
The euro’s peak Friday was above the previous all-time high of $1.5229 that it reached on Thursday.
In midmorning trading, the euro subsided to $1.5192 from the $1.5215 it bought in late New York trading Thursday.
With the economy slowing and inflation rising, fears have grown that the country could be headed for the dreaded twin evils of stagnant growth and rising prices known as “stagflation.”
“The dollar looks set to finish the month with yet more downside pressure being heaped upon it,” said Gary Thomson of CMC Markets in London.
The British pound fell to $1.9841 from $1.9926. The dollar dipped to 104.07 Japanese yen from 105.36 yen in New York the night before, hovering around three-year lows.
The euro topped $1.50 for the first time since its 1999 introduction early Wednesday, then surged above $1.51 after markets took comments from Bernanke as a sign that yet more U.S. rate cuts are on the way.
Lower interest rates can jump-start a nation’s economy, but can weigh on its currency as traders transfer funds to countries where they can earn higher returns.
AP | Friday, February 29, 2008
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