Dollar falls sharply as new data revive inflation concerns

The US dollar fell sharply on Friday after an inflation snapshot triggered renewed concerns about the US economy, traders said.

The single European currency was changing hands at US$1.3307 at 8pm GMT, compared with US$1.3236 late on Thursday in New York. The euro at one point climbed to US$1.3340, its highest point against the dollar since Dec. 8.

The US dollar gained ground against the New Taiwan dollar on Friday, increasing NT$0.073 to close at NT$33.102. A total of US$919 million changed hands during the day's trading.

The US currency opened at NT$33.029 and fluctuated between NT$32.880 and NT$33.102. The dollar meanwhile dropped to ¥116.72, compared with ¥117.48 on Thursday.

"The currency market was laden with a number of concerns for the US economy and its currency. Over the past days, weak retail sales, inflation and factory activity gauges have left the greenback little fuel for big moves," said John Kicklighter, a currency analyst at Forex Capital Markets.

Economists said the latest US inflation reading would likely cement a decision next week by the Fed to keep US interest rates on hold at 5.25 percent. The Fed, which has cited inflation as one of its key concerns, meets Tuesday and Wednesday in Washington to mull US rates.

The US Labor Department said earlier on Friday that US consumer prices rose 0.4 percent last month, stronger than the 0.3 percent rise widely expected by Wall Street.

The core inflation reading, which strips out volatile food and energy costs, rose 0.2 percent and was in line with forecasts.

The rise in inflation comes amid a wider slowing of the world's largest economy, although a separate economic indicator on Friday was more upbeat.

A Fed report showed US industrial production rebounded by a much bigger-than-anticipated 1 percent last month after falling in the prior month.

Most economists had been expecting the central bank's monthly snapshot of the nation's industrial sector, measuring the output of US factories, mines and utilities, to show a rise of just 0.3 percent.

The jump in industrial output across the US marked the strongest gain since November 2005, but was largely attributed to a ratcheting up of gas and electricity output from the nation's utilities amid cold winter temperatures.

In late New York trading, the dollar stood at 1.2071 Swiss francs, from SF1.2171 on Thursday. The pound was being traded at US$1.9414 after US$1.9360.