US dollar tumbles to all-time low against the euro

Oct 23 2007 by Iain Laing, The Journal

THE US dollar tumbled to a new euro low yesterday as concerns over the state of the US economy deepened.

The euro traded as high as $1.4348, breaking its last record set on Friday when one euro bought $1.4319. The sell-off was triggered on Friday by a profit warning from building equipment manufacturer Caterpillar, sparking concerns over the slowing US economy.

But the dollar rebounded back to trade at $1.4146 against the euro bloc’s currency in afternoon trade in London. The greenback also slipped to a six-week low against the Japanese yen on Monday, reaching 113.25 yen at one point, but gained against the British pound to trade at $2.0315 after initial falls.

The dollar could weaken further if the US Federal Reserve cuts interest rates again at its meeting at the end of the month, making the US currency less attractive for income seekers.

Meanwhile, the strong euro is a threat to exporters and to the wider region’s economy.

The latest falls come after a joint International Monetary Fund and World Bank meeting in Washington last Friday, which ended without any reference to the weakness of the US dollar or the strength of the 13-member Euro bloc’s currency.

Analysts say this apparent indifference suggests central bankers have no intention of interfering in this area of the currency market.