The euro this morning fell to yet another record low-- $0.8290-- in European trading.
"There was a large sell order out of Hong Kong and that's what seems to have pushed the currency to new lows," said a trader at
Since its inception at the beginning of 1999, the euro, the currency of the
, has consistently fallen against the dollar. The euro has lost 30% of its value in 22 months. Only a month ago the
European Central Bank
was joined by the central banks of other major countries-including the U.S.-in a huge exercise to prop up the euro against a number of other currencies. The intervention effort was made in the hope of arresting the decline, but the results were short-lived and the euro's
never-ending slide was quickly resumed.
All major currencies, except the yen, have also dropped against the dollar this morning. The trigger for these declines seems to be the market's conclusion that the
meeting going on now in Montreal will not address the foreign exchange market in any detail and will not lead to any immediate further intervention. Yesterday's unambiguous comments from Treasury Secretary
that the U.S. policy to have a strong dollar remains unchanged clearly suggest there are strict limits to the willingness of the U.S. to continue to boost the euro.
"I don't know if there's any special development --- we're not going to get anything special from the G20," said Derek Halpenny of
Bank of Tokyo Mitsubishi
. Halpenny sees the euro's decline as an ongoing fact of life and thinks continued new lows are likely. The G20 is a group of 20 industrialized nations, made up of the more commonly known G7 and other wealthy countries, including Australia and New Zealand.
As of yesterday, economic data from Europe were also not helping the euro. German import prices rose 13.4% from the prior year, the fastest year-on-year increase in 19 years. This suggests there will be more inflation down the line. Euro zone countries want to cut interest rates to encourage growth, but they can't make those changes when inflation grows.
For companies in the U.S. that do business overseas, a weak euro cuts into corporate profits because they have to bring their earnings from overseas home. A number of large companies have already said the weak euro is hurting their bottom line.
Sterling has slipped moderately as the euro has slumped further. It is opening a penny lower at $1.4400. The pound is clearly preferred to the euro and the cross between the two currencies is at a new low of 57.60 pence. Sterling lost ground on publication of the October survey from the
Confederation of British Industry
, which showed confidence at a low level. The Confederation wants the
Bank of England
to signal that U.K. interest rates are now at a peak.
The Swiss franc saw a new 14-year low at SF1.8105 this morning and is now trading a little better at SF1.8050. In euro terms, the Swiss franc is close to its lifetime high at SF1.5015. That's one way to look at it.
The Japanese yen has resisted the dollar's push and is only slightly softer this morning.
The Canadian dollar is suffering along with European currencies and is about a cent lower at C$1.5205.
A number of smaller currencies, including the Australian dollar, New Zealand dollar and South African rand are also near record lows against the dollar.
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