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FX round-up: Dollar hits new low against euro

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Date: Tuesday 22 Apr 2008

LONDON (ShareCast) - The dollar hit a new record low against the euro on Monday and fell against the yen as concern about the health of the financial markets, following disappointing results from Bank of America, crept back in.

Gloomy quarterly figures from the banking giant were a reminder that the worst effects of the credit market squeeze may be far from over.

The dollar had recovered on Friday on hopes that the worst of the credit crunch may be over following Citigroup’s results. However the mood was dampened Monday.

Sterling fell on news that the Bank of England is to make £50bn available to British banks who want to swap mortgage back loans with government bonds in a bid to stave off more economic gloom caused by the credit crisis.

Chancellor Alistair Darling wants the banks to ultimately pass on lower interest rates to mortgage holders.

A Rightmove report out Monday showed house price in the UK fell in April, hit by a lack of mortgage funding and a poor market in the North-West and London.

The euro was boosted by comments from ECB member Klaus Liebscher who said there was no reason for pessimism on euro zone growth. Traders took this as a signal the ECB will not cut interest rates.

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