The dollar on Wednesday slumped to a new record low against the Euro pushed by weaker US growth prospects and pressures for another cut to US interest rates when the Federal Reserve Monetary meets next December 11.
The Euro struck a record peak of 1.4855 dollars -- the highest since the Euro creation in 1999. In late European trade, the Euro stood at 1.4833 dollars, compared with 1.4836 in New York late on Tuesday. The dollar dipped to 108.55 yen, against 109.98 late on Tuesday, after earlier touching 108.27 yen, the lowest level since June 2005. It also hit a low against the Swiss franc at 1.1025 per dollar. The Federal Reserve on Wednesday trimmed back its growth projections citing weakness in housing and tighter credit conditions, but suggested policymakers are unsure about future rate decisions. The US central bank projected growth next year in a range of 1.8 to 2.5%, down from a prior forecast of 2.5 to 2.75%. The Fed had slashed borrowing costs by a hefty half-point in September followed by another quarter-point cut last month in the wake of a collapse in the subprime housing market, which sees mortgages loaned to high-risk borrowers. However a further reduction in US interest rates would likely make the dollar even less attractive to investors. Meanwhile the dollar's fall to the 108-yen level raised new questions about whether the Bank of Japan would intervene to rein in the strong yen, which hurts Japanese exporters, as it did a decade ago. Top government officials have recently played down talk of intervention, arguing that a strong yen also had benefits for the Japanese economy. Elsewhere, the British pound touched its lowest level against the Euro since June 2003 at 72 pence, with the market depressed at the prospect of an interest rate cut, possibly as early as December.