Finance

Finance

International experts: US dollar will plunge in 1H09

14 January 2009 14:20 (UTC +04:00)

However, experts believe that the dollar will start plummeting from the second half after the short-term strengthening.
Traders bet the European Central Bank will cut its key interest rate on Jan. 15 to the lowest level since 2005 and Europeâ€™s single currency will drop to $1.3 after that.
Raiffeisen Research experts said the key rate cut would push down the euro/dollar rate.
The yen rallied against all of the major currencies including the U.S. greenback and the Australian dollar on bets the global recession will lead investors to sell higher-yielding assets and pay back low-cost loans in Japan.
According to financial experts, the global economy and he eurozone will remain low in the first half, resulting in the tactics of risk evasion in the financial market. For this reason, market participants will prefer safe and liquid instruments that will strengthen the dollar.
However, the Fed and U.S. government policies will bring about a decline in the US currency and government bonds.
Experts view the low business activity, declining consumer inflation, an unprecedented decline in production orders, and an increase in the unemployment rate as major factoring limiting the demand in the world economy.
According to Bloomberg, the dollar declined from a five-week high against the euro on speculation reports will show U.S. retail sales and manufacturing fell as the recession in the worldâ€™s largest economy deepened.
The dollar also slid for the first time in four days versus the British pound after Federal Reserve Chairman Ben S. Bernanke said fiscal policy alone wonâ€™t lead to a lasting economic recovery, signaling the government may need to do more to stimulate growth.
The dollar weakened to $1.3236 per euro as of 9:19 a.m. in London from $1.3182 yesterday in New York, when it touched $1.3141, the strongest since Dec. 11. The dollar bought 89.43 yen from 89.38 yen. The euro rose to 118.33 yen from 117.81 yen. The British pound rose to $1.4581 from $1.4501. Stannard said the greenback may decline to $1.3350 per euro today.