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Dollar Falls to Record Low Against Euro; Fed May Lower Rates Agnes Lovasz and Kosuke Goto
The U.S. currency declined versus all 16 of the most- actively traded currencies except the yen after Fed Governor Randall Kroszner said conditions for subprime-mortgage borrowers may worsen. It dropped the most against the South African rand. South Africa's benchmark rate is more than double the Fed's. ``The dollar will continue to weaken because the rate differentials move against'' it, said Marcus Hettinger, a currency strategist at Credit Suisse Group in Zurich. ``The subprime issue is negative because it increases the probability that the Fed will ease again.''
The U.S. currency dropped to an all-time low of $1.4531 per euro before trading at $1.4526 as of 9:55 a.m. in London, from $1.4469 late yesterday in New York. The dollar may fall to $1.4535 today and to $1.46 in the coming days, Hettinger said. Against Australia's currency, the dollar declined to 92.54 U.S. cents, compared with 92.07 late yesterday in New York. The U.S. currency fell to 92.71 cents against its Canadian counterpart, from 93.33 cents yesterday, and to 6.5155 rand, from 6.5900. It was at $2.0852 against the pound, near a 26-year low of $2.0897. The dollar traded at 114.68 yen, from 114.55 yen.
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The dollar fell to a record low against the euro on speculation financial-company
losses from subprime-mortgage defaults will grow, prompting the Federal
Reserve to cut interest rates a third time this year. 
