MercoPress. South Atlantic News Agency

New record low for the US dollar

The Euro reached a new record Tuesday against the US dollar, closing at 1, 3080 in financial markets following reports that Russia intends to increase the European Union currency share of its international reserves.

The US dollar also dropped to its lowest in nine years against the Swiss franc, and lost further ground vis-à-vis the Australian and New Zealand dollars and pound sterling.

Actually the US dollar hit 1,3105 against the Euro before rallying at 1,3080.

Fears that the US wants to see its currency weaken to ease its massive current account deficit have been the main driving force behind the dollar's recent decline. This was further emphasized last week when Federal Reserve chairman Alan Greenspan said that the current account gap and federal budget deficit were unsustainable.

Over the weekend the meeting of the Group of 20 Finance ministers and Central Bank chairmen failed to signal a clear response to the weakening of the US currency.

"The market is betting to keep breaking records against the Euro and the Yen. The latest report about the Russian reserves really whacked us", said a financial operator in London.

Currency strategists said that they expect little change in market sentiment even if US economic data this Wednesday is positive, "the dollar doesn't care about short term US economic fundamentals".