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Dollar Drops To New Record Low Versus Euro [EUR/USD]
4/22/2008 4:03:54 PM The dollar continued its free-fall versus the euro, dropping below $1.60 for the first time ever. The buck also lost considerable ground against the sterling after a Bank of England official made hawkish comments.

The buck`s decline was fueled by the release of data painting a troubling picture of the US housing sector. The National Association of Realtors released its report on existing home sales in the month of March, showing that sales of existing home fell roughly in line with economist estimates after increasing in the previous month.

The report showed that existing home sales fell 2.0 percent to an annual rate of 4.93 million units in March from a 5.03 million unit rate in February. Economists had expected existing home sales to slip to 4.92 million units.

The dollar fell to its lowest ever versus the surging euro, dropping to to 1.6018 from an early level near 1.5850. Traders considered comments from European Central bank officials indicating that the central bank might raise interest rates later this year to help curb inflation.

The greenback was also on the defensive versus the sterling, dropping to a daily low of 1.9998 before stabilizing. In doing so, the buck gave back its considerable gains from the previous session.

The buck lost a bit of ground versus the yem, easing to 103 from an early level near 103.50. The dollar pulled further away from Monday`s multi-week high above 104.50.

The Bank of England`s GBP50 billion Special Liquidity Scheme should allow the Monetary Policy Committee to stay focused on its task keeping inflation in check, a policy maker Timothy Besley said. In the text of his speech titled ‘Inflation and the Global Economy`, the BoE rate-setter said one of the reasons he welcomed the plan announced by the UK central bank a day earlier was that, “it is targeted directly at alleviating a key stress that has followed from the current disruption in financial markets”. “This should allow the MPC to stay more focused on its task of using monetary policy to target inflation”. The speech was delivered at Canada-UK Chamber of Commerce in London.