LONDON: The dollar struck a fresh all-time low against the euro Friday as gold prices traded close to record highs a day after topping $1,000 for the first time on US economic woes.
Oil prices fell on profit-taking after striking a historic peak of $111 per barrel Thursday.
The European single currency reached a record high of $1.5651 in Asian trade Friday, prompting the EU presidency to voice deep concern. In later European trading the euro stood at $1.5566, down from 1.5624 late on Thursday in New York.
The euro s record-breaking strength is a serious issue but EU leaders will not delve into details of the matter at their summit in Brussels, Slovenian Prime Minister Janez Jansa said Friday.
This is a serious issue but we won t go into details during this council meeting, added Jansa, whose country holds the European Union s rotating presidency.
A record-breaking euro was making eurozone exports increasingly expensive for importers paying in dollars, risking a slide in demand for the bloc s exported goods.
Belgian Finance Minister Didier Reynders said the problem was more about the dollar s weakness, which has been driven by growing concerns that the US economy has lurched into recession.
Amid a weak dollar, investors were channeling cash into commodities as they sought shelter from choppy stock markets and fears of a US-led global economic slowdown, traders said. The dollar on Friday also fell below the key 100-yen level for a second day running but later bounced higher.
Resistance to a falling dollar has evaporated as the market is unable to see a drastic improvement in the US subprime home loan crisis, said Saburo Matsumoto, chief foreign exchange strategist at Sumitomo Trust Bank.
Many analysts now expect the US Federal Reserve to cut its key lending rate by as much as three-quarters of a point next week. Investors generally prefer the currencies of countries that have higher interest rates as they can reap better yields.
In Washington, US Treasury Secretary Henry Paulson insisted Thursday that a strong dollar is in our nation s interest and said he would like to see the currency strengthen.
Paulson acknowledged the US economy was suffering but said: Our economy, like any other, has got its ups and downs but the long-term fundamentals are strong and I believe it s going to be reflected in the currency market.
Commerzbank economist Gavin Friend warned: Investors are getting out of the greenback on worsening US data and on fears that the US economy may slip into a longer and deeper recession.
In London currency trading on Friday morning, the euro changed hands at $ 1.5566 dollars against 1.5624 late on Thursday, at 156.53 yen (157.23), 0.7673 pounds (0.7690) and 1.5713 Swiss francs (1.5788).
The dollar stood at 100.58 yen (100.60) and 1.0096 Swiss francs (1.0102). The pound was at $2.0285 (2.0317).
On the London Bullion Market, the price of gold rose to $996 per ounce from $995 late Thursday, when it had struck a record high $1,000.45 per ounce.
Oil prices dropped 48 US cents to $109.85 per barrel on Friday, while European stock markets clawed back some of their recent heavy losses following a traumatic round of blood-letting across global equities this week. – AFP
