Dollar sinks as gold hits 27-year high
By Michael Mackenzie and Daniel Pimlott in New York
Published: September 28 2007 22:19
The dollar hit a record low against major currencies and gold reached a 27-year high on Friday as investors ignored data suggesting that inflation moderated last month. Analysts said the prospect of rate cuts by the Federal Reserve and stronger growth outside the US was weighing on the dollar and boosting commodities.
“The Fed’s rate cuts have a specific driver – growth risks for the US economy,” said Naomi Fink, senior currency strategist at BNP Paribas.
The dollar index, which measures the greenback against six major currencies, fell 0.8 per cent to a record low of 77.66 on Friday. The index has fallen 5 per cent since mid-August.
For the seventh straight day, the euro set a record high against the dollar, rising to $1.4278. Alan Ruskin, chief international strategist at RBS Greenwich Capital, said central banks would express concern if the dollar “quickly approaches $1.45 against the euro”.
Gold prices rose to $752.80 an ounce, the highest price since January 1980.
Robust consumer spending and lower inflation last month could not stop the dollar’s slide.
The core personal consumption expenditure index, which excludes food and energy, rose at an annual rate of 1.8 per cent in August, after a 1.9 per cent rise in July. It was the lowest rate since February 2004 and below the Fed’s 2 per cent ceiling. Spending adjusted for inflation grew at its fastest pace of the year at 0.6 per cent last month, up from a 0.4 rise in July, according to the commerce department.
[source~http://www.ft.com/cms/s/0/0b1e4818-6e07-11dc-b8ab-0000779fd2ac.html]
