LONDON: The dollar s misfortune was extended Thursday with the euro striking a new record high against the greenback as investors shunned risk amid gloomy prospects for the US economy, dealers said. The European single currency achieved a record peak of $1.4875 in Asian trading hours - the highest level since the euro s creation in 1999. Later in European trade, the euro stood at $1.4831, compared with $1.4854 in New York late on Wednesday. US markets were shut Thursday owing to the Thanksgiving national holiday. The dollar also hit an all-time low against the Swiss franc, which is viewed as a haven in troubled times for the global economy. The US unit fell to a record low of 1.1005 Swiss francs. Markets were still digesting Tuesday s downbeat US growth forecasts from the Federal Reserve. The economic expectations have weighed heavily on the dollar, despite the Fed insisting it has no plans to cut US interest rates again in the coming months. With investors still exploring the extent and duration of the US economic downturn, it is no surprise markets are not subscribing to the idea the Fed is reluctant to cut too far, said Gavin Friend, currency analyst at Commerzbank. The Federal Open Market Committee slashed its base federal funds rate by a half-point to 4.75 percent on September 18. It was the central bank s first rate cut in four years. That rate cut, and a subsequent quarter-point reduction to 4.50 percent on October 31, were taken to ease a credit crunch related to the US housing slump. The dollar was also suffering from growing speculation that overseas investors may diversify from the US unit and turn increasingly to the euro. The euro has benefited from heightening expectations that Gulf Arab states and Saudi Arabia will revalue their currencies and introduce a basket to replace the dollar peg, said NAB Capital strategist John Kyriakopoulos. Saudi newspaper Al-Riyadh reported that Saudi Arabia may have started considering a revaluation of its riyal against the dollar ahead of a meeting of heads of Gulf Arab states in early December. Elsewhere, market participants are worried the greenback could go into free-fall against the Japanese unit, even to the 105-yen level, dealers said. But they do not expect the Japanese central bank to intervene in the near term to rein in the stronger yen, which is hurting Japanese exporters. There is no longer any emotional attachment nor aversion against the yen s appreciation among Japanese politicians and corporate executives which we saw a few years ago, said Toru Umemoto, chief forex strategist at Barclays Capital. The US central bank on Wednesday trimmed back its growth projections citing weakness in housing and tighter credit conditions, which emerged over the summer from deterioration in the high-risk subprime loan market. The Fed projected growth next year in a range of 1.8 to 2.5 percent, down from a prior forecast of 2.5 to 2.75 percent. In European trade Thursday, the euro changed hands at $1.4831, against $1.4854 late on Wednesday, at 161.18 yen (161.02), 0.7187 pounds (0.7190) and 1.6344 Swiss francs (1.6366). The dollar stood at 108.71 yen (108.38) and 1.1020 Swiss francs (1.1016). The pound was at $2.0654 (2.0650). In London, the price of gold rose to $802.60 per ounce from $798 late on Wednesday.
