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Fri, Dec 03, 2004 - Page 12 News List

US dollar tumbles against euro

RECORD LOW The dollar fell -- briefly -- to its lowest level since 2000 amid mixed messages over whether European and US officials will intervene to stop the slide


The US dollar yesterday dropped to a record low against the euro in Tokyo and fell to its lowest level in nearly five years against the Japanese yen. The US currency regained some of its losses later in the day.

The dollar's tumble followed a brief respite in its fall against major currencies, and investors said it was driven by the belief that US and European officials would do little to curb its slide.

Japanese Finance Minister Sadakazu Tanigaki called the dollar's dip below ?102 "rather rapid," and vaguely hinted at possible coordinated intervention among Japanese, European and American officials.

"We are always in close contact with authorities overseeing the euro and the dollar," Tanigaki said.

The euro stood at US$1.3373 yesterday afternoon in Tokyo, pulling back from a new all-time high of US$1.3376 earlier in the session, and up from US$1.3298 late Wednesday.

In yen trading, the dollar was briefly as low as ?101.83 -- the US currency's lowest level since Jan. 8, 2000, when it was at ?101.46 in Tokyo. It later rose to ?102.03 at 5pm, down ?0.75 from late Wednesday.

"Basically, the downward trend for the dollar has resumed" due to worries about the US current account and budget deficits, said Toshiaki Kimura, chief manager of foreign exchange and financial products trading at Mitsubishi Trust & Banking Co.

Analysts also said the dollar was suffering from mixed messages about whether officials in Japan, Europe and the US would work together to buy up the currency to check its downward slide.

Hiroshi Watanabe, vice finance minister for international affairs, said on Wednesday that Japanese officials were ready to "take action" if needed. He said Tokyo was in close contact with European authorities.

Tanigaki, however, said early yesterday that those comments did not necessarily mean joint intervention was in the cards.

The decline of the US currency is a global concern, since it makes exports to the US more expensive, while reducing earnings when they are shipped back to their home countries.

The decline of the dollar yesterday continued from overnight in New York, where it posted losses against the euro, yen and pound despite a spate of upbeat US economic data.

The dollar had been rangebound for most of Wednesday's session, but late Wednesday's sharp move lower suggested to some analysts that it may be in for more losses.

Australian Treasurer Peter Costello said yesterday that the sliding US dollar was making the job harder for exporters as Australia's trade balance worsens.

Costello said the Australian dollar, worth US$0.78 yesterday morning, was close to its highest point since it was floated in 1983.

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