Euro gains as dollar slumps

FOR a third day in a row the dollar fell to new record lows as continuing worries about recession in the US saw investors traded in the greenback for the euro and the Swiss Franc.

By late afternoon the dollar was sitting at a new low of €1.5185 having been down as low as €1.5195.

Currency experts warned the dollar will weaken further as fears mount the US is heading for a long recession. The dollar’s decline has been spurred by rising expectations that the US Federal Reserve will be forced to cut interest rates further in an effort to keep the economy from going under, analysts said.

In recent days weak US economic data has fuelled recession fears and raised expectations that Federal Reserve Chairman Ben Bernanke will cut rates.

Lower fourth quarter domestic product figures and a big jump in weekly jobless claims added to the increasing gloom among investors.

“This points to continued slowdown in employment which will fuel concerns about a recession here in the US and certainly adds to the camp of data that is clearly dollar-negative,” Omer Esiner, market analyst at Ruesch International, Washington, told Reuters.

It also reinforces expectations of aggressive policy easing from the Fed and that “makes the dollar vulnerable”, he said.