Dollar hits record low vs. euro

November 20, 2007
Dollar hits record low vs. euro

NEW YORK (Reuters) — The dollar slid to a record low versus the euro Tuesday after the Federal Reserve said a housing slump, tighter credit conditions and high oil prices would likely slow U.S. economic growth in 2008.

The forecast was released along with minutes from the Fed's October policy meeting, which revealed officials' decision to cut rates was a close call following a debate on whether to await more evidence that a housing slump was curbing growth.

Dollar Edifice Crumbling

September 24, 2007
Dollar Edifice Crumbling

U.S. national debt has almost doubled since the start of George W. Bush's first term as president. A lot of people will be looking to blame Bush and his brand of big government conservatism, as well as the unpopular war in Iraq, for the downtrend in the value of the dollar - on which attention has been strongly refocused in the wake of the recent rate cut.

And things are likely to get pretty bad for a while once the dollar's slide turns into a rout, as at some point it will; such is the nature of markets. There was always the possibility that the sub-prime mortgage crisis and associated economic damage – leading to last week's rate cut - would be the trigger, but that hasn't happened so far.

Dollar's retreat raises fear of collapse

September 13, 2007
Dollar's retreat raises fear of collapse

On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week.

"This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar," said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. "We could finally see the big kahuna hit."

While most economists just a few months ago would have dismissed the prospect of a dollar collapse outright, they now are debating the possibility that something on par with the dollar debacle of the 1970s might just happen again.

The major holders of dollars - notably the Chinese, with their $1.3 trillion in currency reserves - have little incentive to see the dollar weaken, and their support provides the dollar with a bulwark of strength. And since investors need to stay diversified, and U.S. markets are deep and liquid, abandoning the dollar wholesale is hardly a realistic option.