Wednesday, 31 December 2003 |
Business |
News Business Features Editorial Security Politics World Letters Sports Obituaries |
Dollar slips further against euro The US dollar broke the psychological 1.25 level against the euro on Monday, setting new record lows. The discovery of a case of BSE, or mad-cow disease, and concerns about security and the current account deficit have all dented confidence. And economists are now warning that the trend is for further weakness, regardless of any short-term rebound. While that may help US exporters and growth, Europe's economy may be hit by the strength of the single currency. The dollar was traded as low as $1.2511 per euro on Monday, before strengthening slightly. Against the British pound on Monday the dollar dropped to an 11-year low. The currency also suffered in Asia, dropping against the Japanese yen to trade at 106.97. The yen's renewed drive upwards was supported by an announcement in Tokyo that the bad debts burdening Japan's banks were easing quicker than thought. Katsunori Kitakura of Japanese financial house Chuo Mitsui said he did not see the dollar price recovering in the short term. Deficits Even though there are increasing signs that the US economy is starting to motor, many investors are now more concerned about the country's widening deficits. The US current account deficit - the balance between what the US buys in goods and services and what it sells - is expected at about 5% of gross domestic product this year. The eurozone, by contrast, has a current-account surplus. And with US interest rates at their lowest levels in almost 50 years, it is unlikely that the money needed to narrow the shortfall will come flooding back in. Currency strategist Aziz McMahon of AMB Amro said there had been nothing to increase sentiment in the dollar or attract new money. "The US economy is growing strongly, but the current account deficit remains a concern, particularly when Asia is looking a more attractive place to invest." -BBC |
News | Business | Features
| Editorial | Security
Produced by Lake House |