Dollar Slides to Record Lows Again

FRANKFURT, Germany — The dollar's plunge continued unabated Thursday, striking record lows after the European Central Bank kept its benchmark rate on hold and the U.S. released another batch of dour economic reports.

The euro fetched a record $1.5370 in European morning trading before falling back to $1.5360. The European currency closed at $1.5262 Wednesday.

Meanwhile, the British pound broke through $2 again after the Bank of England also decided to keep its key refinancing rate unchanged at 5.25 percent.

The British pound traded as high as $2.0057 before falling back to $2.0027.

"Inflationary pressures similarly remain something of a high-profile concern of the Bank of England, but speculation continues to point toward a quarter point cut during the second quarter," said James Hughes of CMC Markets.

The dollar drifted lower to 103.11 Japanese yen from 103.87 yen.

As central banks in Britain and Europe stand pat on rates, the U.S. Federal Reserve Bank has slashed interest rates to 3 percent and investors expect more cuts as the economy continues to fizzle.

The latest record for the euro drew a new round of criticism in Europe, particularly from trade unions worried about exports to the U.S.

"An excessively expensive euro will cost European jobs, coming as it does on top of other setbacks to growth _ the subprime financial crisis and credit squeeze, the U.S. recession, and the end of the construction boom in several EU countries," the European Trade Union Confederation warned.

European Union businesses said they were starting to feel the pinch, too, notably from U.S.-based buyers who pay for goods from Europe.

"We said when the euro was above $1.40 that we feel the pain. When the euro is above $1.50, it is alarming," said Ernest-Antoine Sillier, president of the EU employers' group BusinessEurope.

The euro has been bolstered by a string of downbeat U.S. economic reports, too, that has driven the dollar lower and lower as fears of a U.S. recession mount.

On Wednesday, reports showed that U.S. factories saw demand for their products drop sharply in January, while the country's service sector contracted last month. That provided new evidence of weakness in an economy hit by housing and credit crises _ weakness that has raised expectations that the Fed is not done with its interest rate campaign.

Speculation has mounted that the Fed might cut rates by as much as three-fourths of a percentage point this month. Lower interest rates can jump-start a nation's economy. But they can also weaken its currency as traders transfer funds to countries where they can earn higher returns.

Comments

[GoLeftGoDeep]

the GOP economy now joins the GOP Iraq war as testaments to the utter inability of Republicans to govern ... after 8 years our nation is bankrupt, despised around the world and our money is considered as counterfeit as the GOP is competent

[mmckinl]

Thank you Ben Bernanke ...

How many more hundreds of billions are you going to throw into the banks of your owners and members?

How much lower are you going to lower interest rates that are already causing mortgage rates to spike because of inflation fears?

Time to fire the privately owned and operated Federal Reserve and implement a public central bank that prints money they don't charge us interest on!

[winningticket]

Not only have Bush and Ben Bernanke been totally dismissive of the Dollar's collapsing value, they are colluding in the destruction of it's value. I wonder what the right wing nuts have to say about a collapsing Dollar? I know, their answer is USA! USA!

[holeybuybull]

Looks like the dollar has fallen enough for the introduction of the Amero - the North American Union currency. Mexico will celebrate, Canada, not so much.
Mission Accomplished!

[avicenna]

Well, Canadian exporters will likely whine about it to the gov't to lower business taxes to remain competetive - but it isn't likely to happen because the economy is doing so well and unemployment is at a low in Canada; whereas, the following US dollar is sliding along with its unemployment rate: http://www.cbc.ca/cp/business/080307/b0307220A.html.
Perhaps the days of war stimulating the economy have come to an end - or perhaps the US has the most incompetent gov't in power for a second term in a row - who are more interested in lining the pockets of corrupt corporations and Texan oil barrons then the people.

[Infiniti]

Part 1
Why does Congress let an inept political hack run the Federal Reserve?? Ben (”must keeep cutting rates regardless of the poor outcome.”) Bernanke thinks economic growth is more important than inflation, yet everything this guy does has the opposite affect. Has anyone noticed a marked improvement in their lives since Ben started dropping the rates??

People, companies and markets don’t respond well to uncertainty, yet good old Ben will keep jamming those rates down until the economy grinds to a complete halt. Keep putting the bond market on edge, Ben. They love it when their yields fall!!

Simple economics tells you that by dropping interest rates you are importing price inflation and causing the dollar to fall. Therefore, goods/services become more expensive. Since everything we buy is transported, manufactured or uses Oil in its production, I would think higher oil prices would hurt the economy. Do you agree?

And yet…. Ben is planning another interest rate cut on March 18. Why???????????????????????????

Does Ben not know oil is denominated in dollars??? That means when the dollars falls, OPEC and other oil producers will increase their price to make up the difference. And guess who pays for this hidden “tax” – Americans. Countries like Japan and China have subsidies and price controls which protect buyers from the full brunt and the price swings. We have no such luck. Hey Ben, did you notice that a barrel of oil just hit $106/barrel!!! It was under $100 just a few weeks ago before your last interest rate cut. Do you not see the correlation??

[Infiniti]

Part 2
Also, foreigners, who are swamped in dollars, will park their money elsewhere which causes our weakened dollar to fall even more. The Europeans have their rate at 5.25%. We are at 3% and sliding into oblivion. Do you see a pattern here? Ben, have you thought through your actions? Drop the rate close to 1% and the US will have no investors. Who is going to support our massive $9 trillion debt? I guess you don’t think that’s a real problem, huh?

So if we drop interest rates some more, big deal. What does that really get us?? Low interest rates got us into this mess. Do you ever talk to Greenspan? He may have some knowledge in that area. The real benefits are for Wall St., the big banks and CEOs that profited handsomely over the last 6 years. The America public is bailing them out - again.

Of the 6 million people that are affected by the sub-prime debacle, only a few hundred thousand qualify for any relief. Banks today are as stingy as ever and will not drop their rates. Even if you have good credit, unless you plop down 10-20%, the banks won’t convert your ARM to a conventional loan. Plus, dropping the FF rate has absolutely no affect on how and when their rates - Reset.

The US has a structural problem of too much debt and high energy costs. Bernanke, go back to school and learn why you are just exacerbating the problem.

All this short-sightedness will cause most of us (not the wealthy), a lot of real pain. In the near future, we will have rapid inflation, faster declining growth and no way out except for higher unemployment, higher interest rates, higher oil and possibly tax hikes. Stagflation has returned. Nothing is free. You can bank on that!

[Infiniti]

Why does Congress let an inept political hack run the Federal Reserve?? Ben (”must keeep cutting rates regardless of the poor outcome.”) Bernanke thinks economic growth is more important than inflation, yet everything this guy does has the opposite affect. Has anyone noticed a marked improvement in their lives since Ben started dropping the rates??

People, companies and markets don’t respond well to uncertainty, yet good old Ben will keep jamming those rates down until the economy grinds to a complete halt. Keep putting the bond market on edge, Ben. They love it when their yields fall!!

Simple economics tells you that by dropping interest rates you are importing price inflation and causing the dollar to fall. Therefore, goods/services become more expensive. Since everything we buy is transported, manufactured or uses Oil in its production, I would think higher oil prices would hurt the economy. Do you agree?

And yet…. Ben is planning another interest rate cut on March 18. Why???????????????????????????

Does Ben not know oil is denominated in dollars??? That means when the dollars falls, OPEC and other oil producers will increase their price to make up the difference. And guess who pays for this hidden “tax” – Americans. Countries like Japan and China have subsidies and price controls which protect buyers from the full brunt and the price swings. We have no such luck. Hey Ben, did you notice that a barrel of oil just hit $106/barrel!!! It was under $100 just a few weeks ago before your last interest rate cut. Do you not see the correlation??

Also, foreigners, who are swamped in dollars, will park their money elsewhere which causes our weakened dollar to fall even more. The Europeans have their rate at 5.25%. We are at 3% and sliding into oblivion. Do you see a pattern here? Ben, have you thought through your actions? Drop the rate close to 1% and the US will have no investors. Who is going to support our massive $9 trillion debt? I guess you don’t think that’s a real problem, huh?

So if we drop interest rates some more, big deal. What does that really get us?? Low interest rates got us into this mess. Do you ever talk to Greenspan? He may have some knowledge in that area. The real benefits are for Wall St., the big banks and CEOs that profited handsomely over the last 6 years. The America public is bailing them out - again.

Of the 6 million people that are affected by the sub-prime debacle, only a few hundred thousand qualify for any relief. Banks today are as stingy as ever and will not drop their rates. Even if you have good credit, unless you plop down 10-20%, the banks won’t convert your ARM to a conventional loan. Plus, dropping the FF rate has absolutely no affect on how and when their rates - Reset.

The US has a structural problem of too much debt and high energy costs. Bernanke, go back to school and learn why you are just exacerbating the problem.

All this short-sightedness will cause most of us (not the wealthy), a lot of real pain. In the near future, we will have rapid inflation, faster declining growth and no way out except for higher unemployment, higher interest rates, higher oil and possibly tax hikes. Stagflation has returned. Nothing is free. You can bank on that!

[speakingtruth2power]

Is all of this BushCo's clumsiness (corruption & incompetence) or is it part of their plan?

Seriously! Look again at the Milton Friedman proposal that corporatism makes big gains

during times of significant turmoil. Look at how they managed Katrina and have allowed

the civil war in Iraq to fester. This is the Bush crime family's CHAOS THEORY AT WORK!!

[AnnArky]

How can anyone be a Republican and think that George W. Bush is anything but the worst President in this country's history. He and his adminstration (thanks to the lock-step Republicans in congress and the spineless Democrats) have single-handedly brought this country to it's knees financially, morally and spiritually. If you support Bush by ranting against the left wing then you're simply a f*cking idiot with your head up your ass.

[hardrain77]

ABOLISH THE FEDERAL RESERVE!!!!!!!!!!!!!!!!!!!

It obviously isn't doing what it was intended to do.

[sammy333]

POPULARITY.
The neocons have that delusional point of view that the economy in an open World can be regulated by tweaking the interest rates and other money tools. In order to push the US policies to a perpetual war and hostility stand they are covering up the fact that other countries need to like the US in order to invest in the dollar or the US economy. But now 1) the dollar keeps falling 2) jobs continue to flow to other countries.

Is there any way to expose those crooks and start moving in the right direction (not gonna happen with McCain, Hillary, CNN, Fox, NYT,... those are rotten to the bone ).

[BPCentrisAmerican]

Nero fiddled while Rome burned. The new phrase will be Bush tapped danced while the US economy collapsed. Maybe we can use it for toilet paper like the Constitution. I wish he would do the old soft shoe right back to Texas.

[speakingtruth2power]

and keep going all the way to Paraguay!

[Erdgeist]

Hopefully, we will see 5 and 6 dollars a gallon for gas before the November elections with a huge unemployment rate. The Democrats in Congress should do nothing. Let the economy collapse. Then sweep both houses getting rid of the swine who caused this. Then when a Democrat President takes office, cut the Pentagon budget in half (I mean who needs Cold War weapons?), then arrest members of any institution supportive of Milton Friedman's neoliberalism (we all know what Pinochet did to Chile), and water board them.

[Tabasco]

Don't sugar coat it, Erdgeist. Give it to us straight.

[Amennyc]

Dollar what's that? I started paying for things with rocks. They have much more value these days....

[JoeBlough]

Let's nationalize the oil companies.
The only way to get rid of the terrible profit burden place upon America would be to nationalize the oil companies and sell gas at cost.

[studlyguy]

3.....2.....1..... just counting days?weeks?months? the dollar collapses

[studlyguy]

3..... 2.....1...... just counting the days the dollar collapses