The dollar fell on speculation the Federal Reserve's plan
to provide funds to banks won't be enough to break the gridlock
in money-market lending and stem credit losses.
``Read the need for such new measures as being a symptom
of what ails the world and not a panacea for its problems,''
said David Simmonds, the London-based global head of currency
research at Royal Bank of Scotland Plc, the world's fourth-biggest
foreign-exchange trader. ``Stay short dollars.''
A short position is one where traders bet on a drop in the
price of an asset.
The U.S. currency also declined as traders wagered the Fed
will cut rates by as much as three quarters of a percentage
point to prevent a recession, while the European Central Bank
keeps borrowing costs unchanged. The yen advanced against
the dollar and the euro after Japan's economy grew faster
than forecast in the fourth quarter.
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The dollar fell to $1.5446 per euro by 10:18 a.m. in London,
from $1.5338 yesterday, when it declined to $1.5495, the weakest
level since the European single currency's debut in 1999.
It slipped to 102.97 per yen from 103.42 yen. The euro was
at 159.07 yen from 158.61.
The U.S. currency also dropped to $2.0191 against the U.K.
pound from $2.0064 before Chancellor of the Exchequer Alistair
Darling delivers his first budget statement to Parliament
at noon in London today.
The yen climbed as a revised Japanese government report showed
gross domestic product increased an annualized 3.5 percent
in the three months through December, faster than the 2.3
percent median forecast of 27 economists surveyed by Bloomberg
News.
Dollar Peg
The U.S. currency was also weighed down by speculation that
Gulf central bankers will consider dropping the dollar peg
when they meet next week. A Qatari official denied in a telephone
interview that the meeting will discuss currency revaluation.
The euro extended its gains against the dollar after an European
Union report showed industrial production in the region increased
for the first time in three months in January, rising 0.9
percent from January, more than twice the rate forecast by
economists surveyed by Bloomberg.
Full
article here.
