The dollar fell to its lowest against the euro in more than three years on concerns the US will attack Iraq and North Korea will resume development of nuclear weapons.
"Until the North Korea and Iraq issues are sorted out" the dollar will weaken, said David Rolley, who manages global bonds at Loomis Sayles & Co in Boston, which invests about US$50 billion in fixed income. Foreign investors see little reason to buy US stocks "at these levels unless you're confident we're looking at an accelerating world recovery and improving earnings. Without that demand, it's going to be difficult for the dollar."
The US currency weakened to US$1.0436 per euro at 4:40pm in New York from US$1.0375 yesterday. It reached US$1.0442 earlier, its lowest value since Nov. 17, 1999. The dollar was little changed at ?119.89 from ?119.96.
For the week, the dollar lost 1.6 percent against the euro and 0.4 percent against the yen. The US currency has slumped more than 4 percent against the 12-nation euro in the past month.
Trading is below average because of holidays this week and next, and that can exaggerate swings in exchange rates, traders said.
Stocks declined, pushing the benchmark Standard & Poor's 500 Index down 1.6 percent, extending its drop this year to 23.8 percent.
Some foreign investors are putting less money in US stocks, damping demand for the currency, on the prospect President George W. Bush will lead a war against Iraq, analysts said. The nation's current account deficit, the broadest measure of trade, means the US must attract almost US$1.4 billion a day from abroad to sustain the dollar's value.
Concern about war will keep the euro above US$1 through the end of March, according to 76 percent of the 51 currency analysts surveyed by Bloomberg News. Almost three quarters of those polled see it at that level at the end of nest year.
The US currency has dropped 14.8 percent against the euro and 9 percent against the yen this year as a recovery in the world's largest economy failed to accelerate.
Growth probably slowed to a 1.5 percent annual rate this quarter from a 4 percent pace from July through September, according to a Bloomberg News survey of economists.
Wal-Mart Stores Inc, the world's largest retailer, lowered its December sales forecast yesterday as consumers concerned about growth and jobs curtailed spending. It was the worst holiday season in more than three decades for US retailers.
"We are starting to see reports out of the US retailers adding to the dollar's weakness," said Andrew Busch, senior currency trader at Bank of Montreal in Chicago. The dollar may weaken to US$1.0450 per euro in coming days, he said.
Escalating tensions with North Korea may also hurt the dollar. North Korea expelled UN nuclear inspectors, Yonhap News reported, citing the country's Chosun Central Broadcasting Station.
Speculation the US may be drawn into another conflict is mounting as North Korea flouts its 1994 agreement to freeze production of nuclear fuel. Defense Secretary Donald Rumsfeld last week said the US can fight two wars at the same time.
A US attack on Iraq "could easily be seen as very bearish," weakening the dollar to US$1.10 per euro in the next month, said Chuck Spence, head of foreign exchange sales at ING Capital Markets LLC. "In the Gulf War the dollar suffered because consumers were reluctant to spend, they were fearful of flying, and consequently the economy shrunk."
The dollar fell almost 7 percent against the yen and 6 percent against the deutsche mark in the first four weeks after the US drove Iraqi forces out of Kuwait in January 1991.
Gains in Japan's currency may be limited by expectations the government will sell yen to stem its currency's rally and help bolster exports. A report showing industrial production fell in November for a third month, indicating an economic recovery is faltering, may also push the yen lower.
Finance Minister Masajuro Shiokawa said Japan would "have to take action if the yen gets stronger," echoing earlier comments by his deputy, Haruhiko Kuroda.
The Bank of Japan may sell the currency if it strengthens to ?119 or ?118 to the dollar, said Monica Fan, a senior currency strategist at RBC Capital Markets in London.
Currency sales by the Bank of Japan would add to the ?4 trillion it sold over seven days in May and June, a record for one quarter.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained