Terror warning hits the dollar

THE dollar fell to a record low versus the euro in New York yesterday, after the US raised its security alert because of what officials called a “substantial increase’ in the potential for terrorism during the holidays.

Homeland Security Secretary Tom Ridge raised the alert to “high” from “elevated”. The dollar has weakened in the past six weeks against the euro and is headed for the biggest annual decline in the euro’s almost five-year history, down 15%, as higher interest rates in Europe lured investors.

“We are trapped in a dollar-softening trend,” and the heightened alert is “bad for the US dollar,” said David Durrant, New York-based chief currency strategist at Bank Julius Baer & Co., which has about $87 billion in assets.