Friday, November 2, 2007

Dollar Falls to Record Low Against Euro as Credit Concern Rises

The dollar fell to a record against the euro and declined against most major currencies on concern deepening credit-market losses will prompt the Federal Reserve to reduce interest rates again this year.

The dollar dropped to the lowest against a basket of currencies as Deutsche Bank AG said Merrill Lynch & Co.'s writedowns on collateralized debt obligations may reach $10 billion. Traders raised bets that the Fed will reduce its target rate for a third time on Dec. 11. The U.S. currency rose versus the yen after a report showed U.S. job growth accelerated.

``People believe that the financial trouble will pick up and that the Fed will end up having to cut after all,'' said Win Thin, a currency strategist with Brown Brothers Harriman & Co. in New York. ``We may go to $1.50 per euro in this quarter.''

The dollar fell to $1.4505 per euro at 12:44 p.m. in New York, from $1.4425 yesterday. The U.S. currency traded at 114.87 yen from 114.66. The dollar earlier weakened to a record low of $1.4525 per euro. It earlier rose to as high as 115.40 per yen following the October payrolls report. The yen fell 0.7 percent to 166.53 per euro.

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