Dollar suffers biggest annual decline against euro

THE dollar had its biggest annual decline versus the euro on low US interest rates relative to Europe, and on signs officials on either side of the Atlantic aren’t concerned about the decline in the US currency.

The Federal Reserve has said it won’t rush to raise its target rate from 1%, which is half the European Central Bank’s level. On a trade-weighted basis, the US currency shed about 15% last year, the most since 1987.

Investors have “little reason to step in and buy dollars,” said Robert Sinche, head of global currency strategy in New York at Citigroup Inc. “The Fed has told us that economic data isn’t going to change anything in terms of interest rates.” Against the euro last year, the dollar lost about 17% and weakened to a record low of $1.2649 earlier yesterday. As of 5pm in New York yesterday, the dollar was trading at $1.2597 per euro, compared with $1.2551 on Wednesday. The dollar reversed early morning declines as some traders closed out positions before the New Year’s Day holiday.