[NYTr] Dollar slumps to another historic low vs Euro

[All the News That Doesn't Fit]

AFP - Nov 20, 2007
http://www.afp.com/english/news/stories/071120173617.s3umjs8d.html

Dollar slumps to fresh euro low

LONDON (AFP) - The dollar plunged to another historic low point against
the euro Tuesday, as the greenback was plagued by concerns over the US
economy amid a global credit squeeze, dealers said.

The European single currency leapt as high as 1.4814 dollars -- the
highest level since the euro's creation in 1999 -- as it also drew
strength from favourable interest rate differentials, they added.

The euro later pulled back to stand at 1.4786 dollars, which compared
with 1.4665 dollars in New York late on Monday.

The dollar rose to 110.12 yen, compared to 109.74 late on Monday.

Earlier Tuesday, the US currency began plumbing fresh record euro lows
after more bad news from the banking sector hit investor confidence
over the American economy.

"When concerns over the economy grow, you turn to stable currencies --
for example the dollar, but ultimately the dollar is going down so now
you would buy the euro," said Neil Mellor, currency strategist at Bank
of New York.

Dealers absorbed news on Tuesday that US housing starts rebounded 3.0
percent in October after falling sharply in the prior month, according
to a US government survey.

However, the report showed building permits, a sign of future
construction activity, fell 6.6 percent to a weaker-than-expected
annual pace of 1.178 million.

Despite the rebound in starts, the US housing market remains under
pressure. Starts have fallen 16.4 percent from October of 2006 as
property sales have slowed and home foreclosures have surged.

"The huge overhang of homes for sale, high cancellation rates and
concern about impending foreclosures has left builders cutting
production," said Lehman Brothers analyst Michelle Meyer.

Elsewhere, the dollar fell heavily against other major rivals,
including sterling and the Swiss franc, as a slew of negative reports
in the banking sector shook investor optimism.

Goldman Sachs on Monday urged clients to sell shares in US banking peer
Citigroup, citing an expected 15 billion-dollar write-down in its next
fiscal quarter owing to its exposure to the subprime mortgage crisis.

Goldman also downgraded the number two US home-improvement retailer
Lowe's on fears over further deterioration in the housing market,
causing concern that consumption could be slowing.

"We are currently in the midst of a second wave of the subprime crisis
kicked off in mid-October by large bank write-downs and expectations of
further write-downs in the current quarter," added ABN Amro economist
Greg Gibbs.

Market players also had their eyes turned to minutes of the October
meeting of the Federal Open Market Committee (FOMC), due for release
Tuesday, to look for clues on the Fed's rate move next month.

The US central bank cut rates twice since September in an attempt to
appease distressed financial markets and prevent the US economy from
stalling, but the outlook has been muddled by sturdy inflation.

On Tuesday, the market was also gripped by rumours of an advance
meeting of the FOMC.

In late European trade Tuesday, the euro changed hands at 1.4786
dollars, against 1.4665 late on Monday, at 162.89 yen (160.96), 0.7160
pounds (0.7153) and 1.6417 Swiss francs (1.6354).

The dollar stood at 110.12 yen (109.74) and 1.1103 Swiss francs
(1.1149).

The pound was at 2.0650 dollars (2.0497).

In London, the price of gold rose to 795.50 dollars per ounce, from
778.85 dollars late on Monday.