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Last Updated: Saturday, 29 September 2007, 11:40 GMT 12:40 UK
Euro hits $1.42 and keeps rising
Money changer exchanges euros for dollars
The low value of the dollar is pushing up the gold price
The US dollar sunk to yet another new low against the euro on Friday amid growing hopes that the Federal Reserve will cut interest rates further.

In late New York trade, the euro surged past $1.42 after a US government report showed that inflation had eased.

This was suggested by a 0.1% rise in core consumer prices, which strips out volatile energy and food prices.

The news encouraged dealers to bet that US interest rates could be heading lower, further weakening the dollar.

The greenback has been sliding since the Federal Reserve cut rates from 5.25% to 4.75% last week to help rejuvenate confidence in the world's largest economy after a summer of turmoil in the world's credit markets following the sharp rise in borrowing costs.

Since then, a raft of mostly disappointing economic news has prompted anticipation of further rate cuts.

The bleak outlook for the dollar has been one of the factors pushing up the price of gold, which has also been setting daily records as investors seek a safe haven from the weakening dollar as well as using it as a hedge against inflation.

The spot gold price jumped to $745.50 an ounce, its highest level since January 1980 when it reached $850.


SEE ALSO
Euro sets yet another dollar high
24 Sep 07 |  Business
Jobs fears as euro gets stronger
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26 Jul 07 |  Business
Yuan hits new high versus dollar
25 Jul 07 |  Business
European economy 'sound' - Trichet
11 Sep 07 |  Business




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