Wed, Nov 21, 2007 - Page 11 News List

Euro hits record high against dollar in London trading


The European single currency struck a record high US$1.4766 in trading in London yesterday after more bad news from the banking sector hit investor confidence over the US economy, traders said.

In early European trade, the euro beat its previous historic peak of US$1.4752 reached on Nov. 9.

The dollar also fell heavily against other major rivals, including sterling, the Swiss franc and yen as a slew of negative reports in the banking sector on Monday shook investor optimism.

"Markets have been very sensitive to a bunch of negative news from the US, forcing investors to shun risk and instead hedge their positions," said Hideaki Inoue, chief foreign exchange strategist at Mitsubishi-UFJ Trust and Banking Corp.

Goldman Sachs on Monday urged clients to sell shares in US banking peer Citigroup, citing an expected US$15 billion write-down in its next fiscal quarter owing to its exposure to the subprime mortgage crisis.

Goldman Sachs also downgraded Lowe's -- the No. 2 US home-improvement retailer -- on concerns over further deterioration in the housing market, causing concern that consumption could be slowing.

Market players had their eyes turned to minutes of last month's meeting of the Federal Open Market Committee, due for release yesterday, to look for clues on the US central bank's rate move next month.

The Fed cut has rates twice since September in an attempt to appease distressed financial markets and prevent the US economy from stalling, but the outlook has been muddled by sturdy inflation.

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