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Dollar Falls to Near Record
Low Against Euro on Inflation Data
Kim-Mai Cutler
Bloomberg
Monday, March 31, 2008
The dollar fell to near a record low against the euro after a
report showed inflation accelerated in the 15-nation bloc, giving
the region's central bank more reason to keep interest rates unchanged
while the Federal Reserve lowers borrowing costs.
The dollar headed for its biggest quarterly loss since 2004 after
a preliminary report from the European Union showed consumer-price
growth quickened to the fastest pace in 14 years in March. European
Central Bank policy maker Erkki Liikanen said today inflation
threats are growing. The pound fell to an all- time low against
the euro, poised for its largest-ever quarterly decline, after
U.K. house prices dropped for a sixth month.
``The market wants to push the euro higher,'' said Stephen Jen,
the London-based head of foreign-exchange research at Morgan Stanley.
``Given the circumstances, the ECB has no choice: it will not
ease. There aren't convincing signs euroland is slowing and inflation
pressures remain high and are accelerating.''
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The dollar dropped to $1.5812 per euro by 6:32 a.m. in New York,
from $1.5796 on March 28. The European common currency has gained
8.4 percent this quarter, the most since December 2004. The euro
may rise to $1.64, before declining to around $1.40 once the European
economy slows and the ECB reduces interest rates, Jen predicted.
The yen declined to 99.44 per dollar, from 99.23 at the end of
last week and to 157.24 per euro from 156.79.
Europe's single currency advanced to 79.68 pence against the
British currency and traded at 79.47 pence after research company
Hometrack Ltd. said the average cost of a home in England and
Wales declined 0.2 percent this month.
High-Yielding Currencies
High-yielding currencies such as the New Zealand and Australian
dollars declined as stocks dropped. New Zealand's currency slipped
0.9 percent to 79.08 U.S. cents after a report also showed business
confidence dropped to a 17-year low in March. The Australian dollar
weakened 0.4 percent to 91.48 U.S. cents.
Consumer prices in the euro area rose 3.5 percent in March, the
EU's statistics office in Luxembourg said. Economists surveyed
by Bloomberg News had expected 3.3 percent.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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