Dollar Drops Against Euro, 11 Other Currencies on Rate Outlook [View All]

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Dollar Drops Against Euro, 11 Other Currencies on Rate Outlook
Feb. 17 (Bloomberg) --<snip>

"The dollar is in trouble," said Mark Austin, head of currency strategy at HSBC Holdings Plc in London."I don't think it will be too long before we see new highs in the euro and the risk is that a move higher could attract new buyers."

Against the euro, the dollar fell to $1.2853 at 12:01 p.m. in New York from $1.2771 late yesterday. The dollar fell to $1.90 versus the British pound for the first time since September 1992 and dropped to a seven-year low versus the Australian dollar. <snip>

"It's very difficult for investors to hold on to dollars right now, just because they can get higher yields elsewhere," Brian Taylor, chief currency trader in Buffalo, New York, at Manufacturers & Traders Trust, with $50 billion in assets said in a radio interview with Bloomberg News. Taylor also said the euro may rise to $1.35 if the European Central Bank doesn't express concern when the currency reaches $1.30.<snip>

The pound was last at $1.90 in September 1992, the month the U.K. quit the European Exchange Rate Mechanism, in which countries agreed to curb fluctuations in their currencies in preparation for the introduction of the euro. <snip>

The pound may reach $2 as a near-record deficit in the U.S. current account weighs on the dollar, said Kenneth Clarke, another former exchequer chancellor under Major.

"I don't see an end to the present process until the current account deficit of the U.S. begins to close," said Clarke, who served from 1993 to 1997.