Currencies - Catch a falling dollar
WORKERS, NOV 2007 ISSUE
Since September 2003, the US dollar has lost about a quarter of its value against sterling. It has fallen even more sharply since the US Federal Reserve cut rates from 5.25 per cent to 4.75 per cent this September. It is also at record lows against the euro.
The falling dollar pushed up spot gold prices to $739 an ounce, the highest since 1981. The euro's rise is hurting exports and could lead to job cuts in manufacturing across Europe.
This follows a summer of turmoil in the world's credit markets, sparked by record loan defaults in the US sub-prime mortgage sector. The US property slump is now spreading to the wider economy, and key international investors are losing confidence in the US economy. A record $163 billion has exited from all forms of US assets, led by unprecedented levels of US bonds sales by Japan, China and Taiwan.
Oil prices have quadrupled since 2002 because of strong demand from fast-growing economies such as China and India.