Dollar dives on deficit worries
THE dollar tumbled to record lows against the euro for the fourth day running today as concerns about America's current account deficit continued to overshadow signs of a US recovery.
The currency dropped as far as 1.2113, its lowest since the euro's launch in January 1999. The dollar has fallen more than three cents in the past week. Against sterling, it hit a fresh five-year low of 1.7317.
'The fall, despite growing proof of a solid recovery in the US economy and especially in its labour market, tells us that the dollar's decline is deep-rooted,' said Koichi Ono, an economist at Daiwa Institute of Research.
A report on Monday that US manufacturing grew in November at its fastest for 20 years failed to stem the slide.
The dollar's fall is a concern to America's trading partners, who fear a loss of competitiveness if the decline continues. It will be high on the agenda at the two-day Bank of England monetary policy committee meeting starting today, at which interest rates are expected to stay at 3.75%.
'A strong UK economy and an attractive yield mean sterling is the best of the bunch at the moment,' said Lee Ferridge, head of global currency strategy at Rabobank.
Australia last night raised its interest rate for the second consecutive month in a bid to cool its economy. Fans from around the world who flocked to the Rugby World Cup helped boost retail sales, contributing to the increase.
