Soros sends dollar to brink of euro parity
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Your support makes all the difference.The dollar fell to within a whisker of parity with the euro yesterday after George Soros said the US currency could lose as much as a third of its value over the next few years.
The euro hit a 28-month high of 99.9 cents as comments by the billionaire former currency speculator added to growing fears that the dollar could suffer a crash.
The dollar also hit a two-year low of $1.538 against the pound, taking its losses over the last month to almost 5 per cent.
Mr Soros, who famously made a fortune by pushing the pound out of the exchange rate mechanism a decade ago, said a fall of a third would "not be unprecedented". He told the Wall Street Journal Europe: "It seems that the trend in the dollar has been reversed." He said the dollar's fall had "some very negative implications" for the world economy, including the danger that it could frighten US consumers.
The dollar sank 10 per cent over the last quarter against a basket of currencies including the yen, euro, Swiss franc, Swedish krona, Canadian dollar and the pound. The fall was the steepest quarterly drop since the last three months of 1987, according to the New York Board of Trade.
The dollar bounced back yesterday afternoon, pushing the euro down to 98.6 cents.
The dollar received strong support from the Federal Reserve, the Bank of Japan and the European Central Bank, which intervened to sell yen to drive down the Japanese currency.
The dollar has been hit by fading hopes of a strong economic revival, signs that investors are shunning US assets and a series of scandals over corporate accounting that culminated in this week's shock from the telecom giant WorldCom.
Stock markets on both sides of the Atlantic clawed back ground lost in the wake of the WorldCom revelations, despite a fresh accounting problem at Xerox yesterday.
The Dow Jones industrial average rose as much as 77 points in early trade, while the technology-based Nasdaq index climbed more than 1 per cent. The mood was boosted by figures showing that consumer confidence had fallen less than expected this month, while incomes rose in May, indicating that the recovery was intact.
In London, the FTSE 100 index closed up 115 points, or 2.5 per cent, at 4,656, near the day's peak of 4,657 – its best level for more than a week.
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