Euro falls to 19-month low against US dollar
Issued on: Modified:
In late London trading, the Euro sank to 1.3092 dollars, a low not seen since March 9, 2007. This comes on the heels of a US Federal Reserve announcement from Ben Bernanke that it would back another US stimulus package
The euro hit a 19-month low against the dollar on Tuesday on lingering worries about a European economic slowdown as a fresh plan to bolster the US economy boosted the greenback, dealers said.
In late London trading, the European single currency sank as low as 1.3092 dollars -- a low last seen on March 9, 2007 -- from 1.3343 dollars late in New York on Monday.
Against the Japanese currency, the dollar fell to 101.04 yen from 101.86.
US Federal Reserve chairman Ben Bernanke had boosted market sentiment by throwing his support on Monday behind another US stimulus package to kickstart the economy, warning there was a risk of "a protracted slowdown."
Derek Halpenny of the Bank of Tokyo-Mitsubishi said: "The dollar should derive support from the monetary and fiscal stance of the US that suggests the US will emerge from this downturn first."
He added: "Pro-active governments intent on implementing growth-orientated policies are likely to be rewarded with stronger currencies, at least initially."
Bernanke backed a second stimulus package to jump-start the sluggish economy, battling tight credit, falling house prices and rising unemployment.
"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said Monday in testimony before the House of Representatives budget committee.
World stock markets tottered Tuesday as investors confronted mixed corporate results in the United States and fretted about fresh warnings of recession there.
Wall Street opened under pressure, the Dow Jones Industrial Average down 0.94 percent at mid-day at 9,178.77 and the Nasdaq 1.69 percent in negative territory at 1,740.14, following mixed performances in Asia and Europe.
Market players were meanwhile looking to see the effects of the credit crunch on companies ahead of a raft of earnings reports due in the coming weeks in the United States and Japan.
"We are now worried about economic fundamentals, and economic indicators for the time being are expected to log weak results," Hiroshi Maeba, a senior dealer at Nomura Securities, told Dow Jones Newswires.
A gloomy economic outlook for Europe, where several countries are forecast to enter recession, continued to way on sentiment meanwhile.
"Economic prospects for the economies on both sides of the Atlantic will be the driving factor for the euro and dollar for the time being," Commerzbank analysts said in a statement.
In late London trading on Tuesday, the euro changed hands at 1.3092 dollars against 1.3343 late Monday, at 133.15 yen (135.91), 0.7769 pounds (0.7771) and 1.5232 Swiss francs (1.5345).
The dollar stood at 101.04 yen (101.86) and 1.1557 Swiss francs (1.1501).
The pound was at 1.6964 dollars (1.7164).
On the London Bullion Market, the price of gold fell to 772 dollars an ounce from a level of 795 dollars reached on Monday.
Daily newsletterReceive essential international news every morningSubscribe