The dollar equalled a record low point against the euro and plunged to a 12-year trough against the British pound today when it failed to shake-off market concern about the twin US deficits.
The single European currency rose to $1.3312 in European afternoon trading from $1.3277 late last night in New York. The euro rose to as high as $1.3336 in European trading, equalling the record level reached yesterday, before easing slightly.
Sterling peaked at $1.9223, the highest summit since September 1992.
The dollar has slumped to a fresh low points against the euro during the past two days in the wake of a drop in US consumer confidence and signals that the European Central Bank is not preparing to intervene in the market to shore up the US unit.
ECB chief Jean-Claude Trichet, speaking yesterday, did not give the market any hint that the central bank would intervene in the market, as US consumer confidence fell to the lowest level since March.
The ECB's last foray into foreign exchange markets came towards the end of 2000, when it acted in coordination with other Group of Seven industrialised countries to buy euros after the single European currency plunged to a record low of $0.8230.
The dollar has been in the doldrums in recent weeks as concerns over the twin deficits in the US combined with talk that central banks around the world are reviewing the structure of their currency reserves away from the US currency.
There was also a general feeling that the US administration is following a policy of benign neglect, that it wants the dollar to fall to help improve the current account imbalance.
Sterling hit the decade-plus high against the dollar following 'positive data flow and hawkish commentary from the Bank of England and OECD', analysts said. UK house price data came in stronger than expected yesterday, while central bank officials were upbeat on the prospects for the economy at a parliamentary hearing.
