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Ailing greenback takes fresh drubbing

The ailing US dollar took a fresh drubbing on Friday, briefly slumping to yet another record low against the euro, as traders voiced increasing concern about the fragility of the US economy.

The single European currency jumped to an all-time high of US$1.5239 earlier Friday before retreating to US$1.5182 at 10pm GMT, down slightly from US$1.5197 late on Thursday.

The dollar has been singed in the past week by the euro and other major currencies as speculators have sold their dollar holdings fearing the world's biggest economy could be on the cusp of a recession which may force the US Federal Reserve to cut interest rates further.

The euro smashed through the psychologically important US$1.50 barrier on Tuesday for the first time since its creation in 1999 and topped US$1.52 for the first time on Thursday.

Although the greenback clawed back some ground against an ascendent euro on Friday, it fared less well against other major currencies.

The US currency was trading at ?103.73, down sharply from ?105.30 late on Thursday, while the pound was little moved at US$1.9889, compared with US$1.9899 a day earlier.

A Commerce Department report showed Friday that US consumer spending increased 0.4 percent last month while personal income rose 0.3 percent.

Both readings were better than anticipated as most analysts had expected spending and income to rise 0.2 percent respectively, but economists said the survey also revealed that Americans' wallets are being increasingly stretched by inflationary pressures.

"Consumers are spending more dollars, but the extra spending is being wiped out by higher prices. After adjusting for inflation, real spending was flat in January, for the second month in a row," said Nigel Gault, an economist at Global Insight.

Economists said the price gains could temper the Federal Reserve's rate-cutting zeal, but Fed officials have signalled they are more concerned about slowing growth than inflationary risks at present.

As such, many economists expect Fed policymakers to cut the federal funds short-term interest rate at a March 18 meeting.

Policymakers have slashed the fed funds rate by 225 basis points since September to 3 percent in a bid to kickstart flagging economic growth.

"The dollar can't seem to catch a break," said John Kicklighter, a currency analyst at Forex Capital Markets.

"The beleaguered currency marked yet another momentous drop against most of its liquid counterparts, chalking up its biggest three day selloff in four years," he said.

"And, leading that charge was the euro-dollar, which marked a fresh record high for the third consecutive session," Kicklighter said.

The pound gave a mixed performance as economic figures continue to show slowing British growth, but the Bank of England was not expected to cut interest rates next Thursday after rate-setters recently stressed inflation worries.

In late New York trading, the US dollar stood at 1.0409 Swiss francs, down from SF1.0512 late on Thursday.
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