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.
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