Dollar hits record low against euro, oil prices rally
www.chinaview.cn 2008-02-27 16:55:14   Print

A woman holds several euro and US dollar notes. The U.S. dollar dipped to a record low against the euro on Tuesday, breaking the 1.50-dollar mark amid lacklustre U.S. economic data and sending investors to pump more money into commodities such as oil as a hedge against inflation.  (Xinhua/AFP Photo)

A woman holds several euro and US dollar notes. The U.S. dollar dipped to a record low against the euro on Tuesday, breaking the 1.50-dollar mark amid lacklustre U.S. economic data and sending investors to pump more money into commodities such as oil as a hedge against inflation.  (Xinhua/AFP Photo)
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   NEW YORK, Feb. 26 (Xinhua) -- The U.S. dollar dipped to a record low against the euro on Tuesday, breaking the 1.50-dollar mark amid lacklustre U.S. economic data and sending investors to pump more money into commodities such as oil as a hedge against inflation.

    In New York trade, the European currency rose from the previous close of 1.4825 to close at 1.4967 dollars. In subsequent electronic trading, the euro reached 1.5047 dollars late Tuesday before falling back to 1.5017 dollars.

    The dollar also sank against a basket of other currencies, including the British pound, the Japanese yen and the Swiss franc.

    The dollar has lost considerable ground against the euro in the past year amid the U.S. housing slump and a credit crunch.

    Tuesday's decline came on the heels of reports showing a plunge in U.S. consumer confidence and a rise in wholesale prices.

    The U.S. Conference Board posted its index of consumer confidence Tuesday, showing a plunge in February to 75.0 from a revised 87.3 in January.

    The reading saw the lowest level since February 2003. The weaker-than-expected index raised concerns about consumer spending which bears crucial importance to U.S. economic growth.

    "The Consumer Confidence Index continues losing ground and, with the exception of the Iraqi War in 2003, is now at its lowest level in nearly 15 years," said Lynn Franco, director of the Conference Board Consumer research center.

    "The weakening in consumers' assessment of current conditions, fueled by a combination of less favorable business conditions and a sharp rise in the number of consumers saying jobs are hard to get, suggests that the pace of growth in early 2008 has slowed even further," he added.

    The U.S. Labor Department also reported on Tuesday that wholesale prices rose 1 percent last month on soaring oil and food costs, more than double the 0.4 percent increase that economists had expected.

    Over the past 12 months, wholesale prices were up 7.5 percent, the fastest since October 1981. "Core" wholesale prices saw an increase of 2.5 percent, the biggest since October 2007.

    Wholesale prices reflect cost pressures before they reach the consumer. The pickup in "core" prices suggested that inflation maybe seeping into a wider range of goods.

    Tuesday's data, along with recent weak retail sales and manufacturing data, have reinforced expectations that the U.S. Federal Reserve will have to further cut interest rates to spur growth.

    The Fed has cut interest rates five times since last September to prevent the economy from sliding into a recession.

    The slumping dollar sparked a further rally in commodities such as oil. Crude futures set a new record close of 100.88 U.S. dollars a barrel on Tuesday.

    Light, sweet crude for April delivery jumped 1.65 dollars to 100.88 dollars a barrel on the New York Mercantile Exchange after hitting a new trading record of 101.15 dollars a barrel.

    Prices were also boosted on concerns about supply disruptions from unrest in Iraq, a major oil exporter, and warnings by Iran against further international sanctions.

    Cold weather across the U.S. Midwest and Northeast has also helped push heating oil prices higher.

Editor: Du Guodong
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