Dollar's Trade-Weighted Index Declines to Lowest on Record

The Federal Reserve's trade- weighted dollar index on Sept. 7 fell to the lowest since its inception in 1971 on speculation slowing U.S. economic growth will force the Fed to cut interest rates.

``This represents the current dollar-selling market,'' said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo. ``The dollar's depreciation may accelerate.''

The U.S. Trade Weighted Major Currency Index measuring its performance versus seven currencies fell to a record low of 76.68 on Sept. 7 as a U.S. government report showed employers cut workers in August for the first time in four years.

The Fed's major index, the weighted average of the U.S. dollar versus the currencies of Australia, Canada, Sweden, Switzerland, Japan, the U.K. and the euro, has fallen 5.8 percent this year as traders have bet the central bank's 5.25 percent key rate is too high to sustain growth.

The central bank's broad dollar index, which includes 26 currencies, dropped to the lowest since July 1997, while the New York Board of Trade's dollar index declined to a 15-year low.

The Fed's broad index also includes the currencies of the U.S. largest trading nations such as China and Mexico.

The dollar traded at $1.3777 per euro as of 9:34 a.m. in Tokyo from $1.3768 on Sept. 7 in New York, 0.5 percent below a record low of $1.3852 reached July 24. It also fell to 112.93 yen, the lowest since Aug. 17, from 113.38 yen. The dollar may fall to 110 yen by year-end, Matsumoto forecast.


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