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| The dollar is unlikely to strengthen
significantly, analysts say
(Agencies) |
The US dollar has hit a new record low against the euro and analysts
predict that more declines are likely in 2005.
Disappointing economic reports dented the currency, which had been
rallying after European policy makers said they were worried about the
euro's strength.
Earlier on Thursday, the Japanese yen touched its lowest versus the
euro on concerns about economic growth in Asia.
Currency markets have been volatile over the past week because of
technical and automated trading and light demand.
This has amplified reactions, analysts said, adding that they expect
markets to become less jumpy in January.
"People want to go into the weekend and the New Year positioned for a
weaker buck," said Tim Mazanec, director of foreign exchange at Investors
Bank and Trust.
The dollar slid to a record $1.3666 versus the euro on Thursday, before
bouncing back to $1.3636. Against the yen the dollar was trading down at
$103.05.
The yen, meanwhile, dropped to 141.60 per euro in afternoon trading. It
later strengthened to 140.55.
Investors are concerned about the size of the US trade and budget
deficits and are betting that George W Bush's administration will allow
the dollar to weaken despite saying they favour a strong currency.
Also playing on investors' minds are mixed reports about the state of
the US economy.
On Thursday, disappointing business figures from Chicago brought a
sudden end to a rally in the value of the dollar.
The National Association of Purchasing Management-Chicago said its
index dropped to 61.2, more than analysts had expected.
German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio
Berlusconi voiced concerns about the strength of the euro.
Mr Berlusconi said the euro's strength was "absolutely worrying" for
Italian exports.
Mr Schroeder said in a newspaper article that stability in foreign
exchange markets required a correction of global economic imbalances.
(Agencies) | 
Updated: 2004-12-31 09:13