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FX round-up: Dollar drops to new low against euro

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Date: Wednesday 23 Apr 2008

LONDON (ShareCast) - The dollar fell to a new record low against the euro and also fell against the yen on Tuesday.

The dollar crossed the key $1.60 mark following comments from European Central Bank Governors that inflation is too high, a factor that could lead to an increase in interest rates. The dollar also fell against sterling.

The dollar has been hit by gloomy US economic data and expectations are that the Federal Reserve will cut interest rates again while hopes that the ECB may cut rates were dampened by recent comments from bank officials.

Bank of France Governor and ECB member Christian Noyer said on Tuesday that the ECB would take the necessary steps to help inflation return to the central bank's target of just under 2% by 2009.

The Bank of England on the other hand is expected to cut interest rates again to boost the slowing housing market.

Sterling rose to a two week high against the dollar after Bank of England policymaker Tim Besley said he welcomed its plan to free up market liquidity.

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