Dollar Continues To Weaken Against Euro
September 24, 2007
The value of the dollar has fallen to yet another record low on world currency exchanges against the euro, continuing its downward trend of recent weeks through another day of poor investment trading.
The value of the dollar has continued to plummet since the US Federal Reserve announced its decision to cut interest rates to 4.75% in order to ease financial markets and stimulate economic growth. The resulting currency sell-off has seen the dollar fall to all-time record lows against the euro, which has conversely see several weeks of strong performance as a result of the ongoing promise of a European Central Bank interest rate rise.
In trading through Monday, the euro had reached the dizzying heights of $1.4130, an all time record before slightly weakening through the rest of the day. The news comes as no surprise to industry analysts, many of whom have feared that prolonged euro exchanges of $1.45 may be realistic before too long.
The news is beneficial for US exports, making them more affordable against other world currencies. As a result, US manufacturing firms have seen strong growth in output and new orders in recent weeks, as a direct response to the cheaper cost of exporting goods.
However the weak dollar is causing problems for importers and those firms that rely on international custom in services and foreign supply in manufacturing sectors. With one dollar buying less foreign currencies, more dollars are required to sustain operations at their previous level.
Many firms in Europe have warned that the high value of the dollar could result in widespread unemployment in those manufacturing businesses dealing outwith the eurozone, which many analysts are fearing could further compound the effects of the global credit crunch in bringing on a recession.
With the dollar very much a face value currency for business transactions, world commerce is already feeling the effect of a consistently weakening dollar.