Filed under: International markets, Other issues, Federal Reserve
The U.S. dollar fell to a record low against the euro and to a yearly low against Japan’s yen Monday on concerns the slumping U.S. economy will increase mortgage defaults and housing losses, Bloomberg News reported.
The dollar deteriorated about 1 cent to $1.5277 against the euro before paring back to $1.5177. The dollar also fell about 1 yen against Japan’s currency, to 102.59 yen, before re-gaining some ground to 103.05 by midday trading. However, the dollar held firm against the British pound, losing just one-fifth of a cent to $1.9820.
Dollar doldrums
A series of macroeconomic and monetary factors has synthesized to create a bearish condition for the dollar. The U.S. economy is near, or already in, a recession, reducing demand for dollar-denominated assets. The U.S. Federal Reserve is likely to lower benchmark interest rates further in an attempt to reverse the economy’s contraction path. In addition, high oil prices are driving up the already above-trend U.S. trade deficit, flooding the world with more dollars. Finally, the U.S. continues to import more than it exports, increasing U.S.’s demand for foreign currencies, further reducing the dollar’s value.
Continue reading U.S. dollar’s decline against major currencies continues
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