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Last Updated: Friday, 19 October 2007, 21:04 GMT 22:04 UK
Dollar stays near record euro low
Dollar bills
Analysts now expect a further cut in US rates
The US dollar hovered near record lows against the euro by close of trade in New York on Friday, as expectations over a US interest rate cut increased.

One euro was worth $1.4265 by mid-afternoon in the US, after the greenback sank just short of $1.4320.

Analysts said a rise in US unemployment adds to chances of an interest rate cut when The Federal Reserve meets in October, in a bid to boost the economy.

Against Japan's yen, the dollar stayed near three-week lows, at 114.77 yen.

Rejuvenate confidence

Commentators now say the Fed could well reduce rates from 4.75% to 4.5%.

The dollar has been sliding since the Federal Reserve cut rates from 5.25% to 4.75% in September to help rejuvenate confidence in the world's largest economy.

This followed a summer of turmoil in the world's credit markets, sparked by record loan defaults in the US sub-prime mortgage sector.

Since then, a raft of mostly disappointing economic news and soft inflation figures has prompted the anticipation of further rate cuts.

While lowering borrowing costs can jump start the economy, it can also have an adverse impact as investors seek to place money in economies where the returns are higher.

SEE ALSO
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