The U.S. Dollar Nears Record Low against the Euro
Since inflation in the Euro zone continue to rise, it appears that the ECB (European Central Bank) will not cut interest rates any time soon, and as a result, the U.S. Dollar almost fell to a record low against the Euro in mid-day trading in Hong Kong on April 22, 2008. In March, Euro zone inflation rose by 3.5%, the fastest jump since 1992 and higher than the 2% target set by the ECB.
According to Klaus Liebscher, a member of the ECB Governing Council, the European Central Bank will not cut interest rates in order to cut inflationary pressures. Mr. Tomoko Fujii of Bank of America said on Monday that, “the hawkish comments are supporting the Euro.” While the ECB will keep interest rates steady in the near future, it appears equally certain that the Federal Reserve will cut interest rates by as much as 25 bp this month, and a further cut in June or August of this year is expected.
On April 22, 2008 at 01:05 (00:05 GMT) in Hong Kong, the Euro traded at $1.5915 compared to $1.5914 traded in Sydney earlier in the day.