Dollar Falls to Lowest Since '95 Versus Yen; Bush Cites Decline
By Stanley White and Ye Xie
March 13 (Bloomberg) -- The dollar fell to the lowest since 1995 against the yen after U.S. President George W. Bush said the dollar is ``adjusting.''
The U.S. currency also slid to a record low against the euro as Bush said its decline was not ``good tidings'' for proponents of a strong dollar. It traded near an all-time low versus the Swiss franc before a government report today that may show U.S. consumer spending slowed as record high oil prices sap purchasing power.
``Bush's comments were about as lukewarm as you can get,'' said Brian Dolan, research director at Forex.com, a unit of currency trading firm Gain Capital in Bedminster, New Jersey. ``Some may have interpreted his `adjusting' comment as tacit acceptance that we're in a broad-based dollar devaluation.''
The dollar traded at $1.5535 per euro at 8:27 a.m. in Tokyo from $1.5551 in late New York yesterday. It touched $1.5573 per euro, the weakest level since the European currency's 1999 debut. The U.S. currency traded at 101.49 yen after reaching 101.10, the lowest since December 1995.
The dollar bought 1.0158 Swiss francs, just above a record low of 1.0128 reached yesterday. The British pound was little changed at $2.0267.
Bush also reiterated his commitment to a strong dollar, in an interview with the U.S. Public Broadcasting Service to be aired later today. ``We have a dollar that's adjusting, and I am for a strong dollar.''
`Real Trouble'
``The dollar looks in real trouble and there is no obvious resistance level against the euro,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``I don't think you can pick a level for where it will stop.''
The dollar also fell as firms from Citigroup Inc. to Goldman Sachs Group Inc. said yesterday the Federal Reserve's plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending.
The dollar has fallen 3.6 percent against the euro since Feb. 26, when Fed Vice Chairman Donald Kohn said credit-market turmoil and slower growth pose a ``greater threat'' than inflation, driving the euro above $1.50 for the first time.
The collapse of the U.S. subprime mortgage market has caused losses and writedowns of $190 billion at the world's biggest financial institutions, according to data compiled by Bloomberg. Concerted action announced Dec. 12 temporarily eased the shortage of cash in money markets.
U.S. Rates
Traders bet the Fed will cut its rate as much as 0.75 percentage point on March 18 to avert a recession. The likelihood of a reduction to 2.25 percent was 76 percent, according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent.
The Fed's measures are ``not a panacea, more like an aspirin for the dollar,'' analysts led by Daniel Tenengauzer, New York-based head of global currency strategy at Merrill Lynch & Co., wrote in a research note. ``There is a reasonable risk that this Fed move reflects the depth of their concern with U.S. asset markets, not a Fed formula to resolve U.S. asset-market difficulties.''
The dollar may decline to $1.57 per euro this month, according to a Merrill Lynch forecast released March 6.
U.S. retail sales rose 0.2 percent in February after a 0.3 percent rise in the previous month, according to a Bloomberg survey. The Commerce Department will release the data later today in Washington. Crude oil in New York touched $110.20 a barrel, the highest intraday price since the futures began trading in 1983.
The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to a record low of 72.20 yesterday and was last at 72.30.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netYe Xie in New York at Yxie6@bloomberg.net
As reported on Bloomberg website
By Stanley White and Ye Xie
March 13 (Bloomberg) -- The dollar fell to the lowest since 1995 against the yen after U.S. President George W. Bush said the dollar is ``adjusting.''
The U.S. currency also slid to a record low against the euro as Bush said its decline was not ``good tidings'' for proponents of a strong dollar. It traded near an all-time low versus the Swiss franc before a government report today that may show U.S. consumer spending slowed as record high oil prices sap purchasing power.
``Bush's comments were about as lukewarm as you can get,'' said Brian Dolan, research director at Forex.com, a unit of currency trading firm Gain Capital in Bedminster, New Jersey. ``Some may have interpreted his `adjusting' comment as tacit acceptance that we're in a broad-based dollar devaluation.''
The dollar traded at $1.5535 per euro at 8:27 a.m. in Tokyo from $1.5551 in late New York yesterday. It touched $1.5573 per euro, the weakest level since the European currency's 1999 debut. The U.S. currency traded at 101.49 yen after reaching 101.10, the lowest since December 1995.
The dollar bought 1.0158 Swiss francs, just above a record low of 1.0128 reached yesterday. The British pound was little changed at $2.0267.
Bush also reiterated his commitment to a strong dollar, in an interview with the U.S. Public Broadcasting Service to be aired later today. ``We have a dollar that's adjusting, and I am for a strong dollar.''
`Real Trouble'
``The dollar looks in real trouble and there is no obvious resistance level against the euro,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``I don't think you can pick a level for where it will stop.''
The dollar also fell as firms from Citigroup Inc. to Goldman Sachs Group Inc. said yesterday the Federal Reserve's plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending.
The dollar has fallen 3.6 percent against the euro since Feb. 26, when Fed Vice Chairman Donald Kohn said credit-market turmoil and slower growth pose a ``greater threat'' than inflation, driving the euro above $1.50 for the first time.
The collapse of the U.S. subprime mortgage market has caused losses and writedowns of $190 billion at the world's biggest financial institutions, according to data compiled by Bloomberg. Concerted action announced Dec. 12 temporarily eased the shortage of cash in money markets.
U.S. Rates
Traders bet the Fed will cut its rate as much as 0.75 percentage point on March 18 to avert a recession. The likelihood of a reduction to 2.25 percent was 76 percent, according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent.
The Fed's measures are ``not a panacea, more like an aspirin for the dollar,'' analysts led by Daniel Tenengauzer, New York-based head of global currency strategy at Merrill Lynch & Co., wrote in a research note. ``There is a reasonable risk that this Fed move reflects the depth of their concern with U.S. asset markets, not a Fed formula to resolve U.S. asset-market difficulties.''
The dollar may decline to $1.57 per euro this month, according to a Merrill Lynch forecast released March 6.
U.S. retail sales rose 0.2 percent in February after a 0.3 percent rise in the previous month, according to a Bloomberg survey. The Commerce Department will release the data later today in Washington. Crude oil in New York touched $110.20 a barrel, the highest intraday price since the futures began trading in 1983.
The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to a record low of 72.20 yesterday and was last at 72.30.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netYe Xie in New York at Yxie6@bloomberg.net
As reported on Bloomberg website
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