- The Washington Times - Friday, November 26, 2004

BERLIN (AP) — The U.S. dollar reached an all-time low against the euro yesterday for the fourth straight day, briefly pushing the European currency above $1.33 before recovering slightly, amid concerns about the twin U.S. deficits and the lack of any central bank action to stop the dollar’s decline.

The dollar also dipped to a nearly five-year low against the yen, but later regained ground.

Yesterday, the euro rose to $1.3329 in early trading before dipping back to $1.3290 later in New York.

The euro topped $1.32 for the first time the day before in European trading. U.S. markets were closed Thursday for the Thanksgiving holiday.

The dollar also traded near its lowest levels since December 1999 against the Japanese yen yesterday, slipping to 102.56 yen, down from 102.81 late Wednesday in New York.

One reason the euro has kept rising is a lack of concerted action by central banks to support the dollar by selling holdings of the other major currencies.

“$1.35 is definitely on the cards now — as for how soon we’ll get there, I’m not sure,” said Riz Din, a currency analyst with Barclay’s Capital in London.

“It increasingly looks as if, despite weaker data in the euro area, the prospects for intervention … are very, very low at current rates.”

The latest dollar collapse, fueled by concerns over the U.S. trade and budget deficits, has taken the euro from around $1.20 about two months ago.

Because the euro’s rise tends to make European products more expensive, European leaders have voiced fears that it might hurt the continent’s export-driven economic recovery. The European Central Bank’s president has called the rapid increase “brutal.”

But the dollar’s weakness is good news for U.S. exporters, helping make American products less expensive overseas.

Commerzbank economist Michael Schubert said speculation against the dollar was making its slide “a bit faster than I had expected.”

“Obviously, it’s difficult to stop the train,” Mr. Schubert said in Frankfurt. A combination of intervention by central banks and positive U.S. economic data could apply the brakes, he added.

Economists say the European Central Bank (ECB) is wary of intervening in the currency markets on its own and the United States would be unlikely to join in such a move.

Mr. Din said the ECB likely would have to deliver some sign that it’s trying to bolster European growth — for instance, a cut in interest rates — to bring the U.S. Federal Reserve on board.

The 12-nation euro initially fell against the dollar after its 1999 debut, but it has risen about 60 percent since bottoming out at 82 cents in October 2000.

The dollar slipped against most other currencies in New York trading yesterday, compared to late Wednesday.

The dollar bought 1.1392 Swiss francs, down from 1.1461, and 1.1768 Canadian dollars, down from 1.1798.

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