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Strategies & Market Trends : Aardvark Adventures -- Ignore unavailable to you. Want to Upgrade?

To: ~digs who wrote (4075)	2/27/2008 4:14:33 AM
From: ~digs	Respond to of 7944

TOKYO (AP) -- The dollar fell to a record low against the euro and to multiyear lows against a number of Asian currencies Wednesday, prompting some central banks to intervene to curb broad dollar selloffs. The euro rose above $1.5000 for the first time, pushed up by growing speculation that the interest rate gap between the euro zone and the U.S. will widen in the European currency's favor. In afternoon trading in Tokyo, the euro bought US$1.5017 compared to US$1.4983 late Tuesday in New York. That drop sparked dollar selloffs in Asia, sending investors to bid up the Philippine peso, Malaysian ringgit, New Taiwan dollar and other regional currencies. The dollar sank to eight-year low against the peso, a decade low against the ringgit, and a 33-month low against the Taiwan dollar, which has led the rally in Asian currencies this year. Against the yen, the dollar was trading at 107.04 yen, down from 107.26 yen late Tuesday in New York. The dollar plunged amid a growing speculation that the interest rate gap between the euro zone and the U.S. will widen in the European currency's favor. Concerns that the U.S. might soon lapse into stagflation, a condition where a recession and inflation simultaneously occur, also prodded non-Japanese investors into trimming their holdings of dollar-denominated assets, traders said. "The crux of the matter is whether the economy will show signs of picking up in America, prompting investors to believe that the Fed could stop cutting interest rates," said Mitsubishi UFJ Trust and Banking chief trader Hideaki Inoue. "As long as U.S. data look weak and speculation of further Fed rate cuts lingers, the dollar will likely extend losses" versus the euro. Receding speculation of a near-term rate cut by the European Central Bank also supported the euro buying, traders said. The dollar sell-off against the euro came after Fed Vice Chairman Donald Kohn on Tuesday signaled downside risks to the economy and that the U.S. central bank may need to slash rates further to prevent the economy from slipping into recession, traders said. Central banks in the Philippines, Malaysia and Taiwan entered the foreign exchange market Wednesday to slow the sudden move upward in their currencies, traders said. At 0650GMT, the dollar was trading at 40.39 Philippine pesos, 3.2020 Malaysian ringgit and 30.948 Taiwan dollars. Traders were on guard for similar moves in Singapore and Thailand, where the authorities are said to have been quietly placing bids for U.S. dollars in recent sessions.