Dollar Further Down To Record Lows

By Stewart Douglas

The value of the dollar has fallen to a new record low against the euro off the back of Federal Reserve interest rate cuts earlier in the week, which has seen many currency investors turn away from the dollar in favour of more beneficial currency investment.

The dollar fell below the benchmark $1.40 to the euro mark through trading today as a direct result of heavy sell offs in light of falling US interest rates, which naturally devalue a currency as a less attractive investment prospect.

At the same time, the Canadian dollar experienced strong growth to take it to a dollar for dollar equality with the US dollar for the first time in over three decades, reflecting the extent of the loss in value the dollar has seen over recent months.

The news, whilst beneficial for US exports to foreign economies, will undoubtedly have the effect of increasing the cost of imports, which could have a lasting detrimental effect on the US economy.

With raw materials and foodstuffs from abroad certain to become more expensive, inflation within the US could become more of a concern over the coming months and years, a worry that many analysts fear in light of the ongoing economic problems stateside.

With recent interest rate cuts the Reserve has attempted to alleviate the pressures on the credit environment and help stimulate growth within the US economy.

However, this could further drive inflationary pressures over the coming months, which many economic analysts have forecast to be a significant problem for the long-term health of the US economy.

Nevertheless, the Federal Reserve’s decision to slash interest rates in light of the ongoing sub-prime pressures has been praised by global analysts as the perfect remedy for the problems faced by global credit markets at this time.