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Dollar stumbles to record low against euro

business Updated: Sep 22, 2007 08:55 IST

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The dollar has stumbled to a record low against the euro amid market expectations the US Federal Reserve will continue to cut interest rates.

The single European currency was at $1.4090 around 0230 IST, up from 1.4065 late on Thursday.

The euro earlier hit an all-time high of 1.4120 against the dollars, weakened by this week's Fed surprisingly robust half-point rate cut.

The euro also climbed against the Japanese currency, rising to 162.55 yen from 161.25 late Thursday. The yen also weakened against the dollar, falling to $115.35 from 114.63.

"The expectation of bigger interest rates cuts in the US relative to other countries, as a result of intensifying concerns about the US economy, are weighing heavily on the currency (the dollar)," said Calyon analyst Mitul Kotecha.

He added that the European single currency "looks set to push even higher over the short term."

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, agreed.

"A further decline in the dollar is likely. The euro has never been higher, but ironically the dollar has been lower against the European currencies," he said.

"Prior to the advent of the euro, in the spring of 1995, the dollar was about three per cent lower against the German mark."

Chandler said that converting the record low for the dollar to the euro would put the single currency a little more than three per cent higher to near $1.