Jamie McGee and Michael J. Moore
Wednesday, December 17, 2008
Dec. 17 (Bloomberg) — The dollar declined the most against the euro since the 15-nation currency’s 1999 debut and sank to a 13-year low versus the yen as near-zero interest rates and rising budget deficits led traders to abandon the greenback.
The greenback extended its drop against a gauge of currencies of six U.S. trading partners, falling 11 percent from a 2 1/2-year high reached Nov. 21. Investors including hedge funds reversed bets that the dollar will appreciate to minimize losses as the end of the year approached, traders said.
“This move is historic,” said Russell LaScala, New York- based head of North American foreign exchange at Deutsche Bank AG, the world’s biggest currency trader. “It’s just going to keep going until the last bit of pain stops. I would not be shocked to see $1.50.”
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The dollar fell as much as 3 percent to $1.4437 per euro, the weakest level since Sept. 29, from $1.4002 yesterday, before trading at $1.4337 at 1:45 p.m. in New York. It was the biggest intraday drop since the euro’s inception. The U.S. currency decreased 1.2 percent to 87.99 yen from 89.05 and reached 87.14, the lowest since July 1995. The euro increased 1.2 percent to 126.22 yen from 124.71.
The pound weakened for the first time beyond 93 pence per euro after the Office for National Statistics said the number of people receiving jobless benefits increased by 75,700 to 1.07 million. Bank of England policy makers voted 9-0 to cut the nation’s benchmark on Dec. 4 to 2 percent, minutes showed. Sterling slid as much as 3.5 percent to 93.27 pence per euro. The pound dropped 0.7 percent to $1.5474.
This article was posted: Wednesday, December 17, 2008 at 12:29 pm