Dollar Falls to Record Versus Euro; Credit Woes May Damp Growth

Bloomberg (07/15/08); Lovasz, Agnes; Goto, Kosuke
Concern that Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson will testify before Congress that the credit crisis is having a negative impact on economic growth in the United States pushed the dollar to an all-time low against the euro. Meanwhile, concerns about the declining value of Fannie Mae and Freddie Mac debt despite the recent proposal from the government to lend a hand drove down the U.S. currency to a more than one-month low against the Japanese yen and a 25-year low against the Australian dollar. With regard to Bernanke's scheduled testimony before the Senate Banking Committee about monetary policy and the economy on July 15, Takuma Kurosawa of HSBC Bank in Tokyo notes, "Bernanke will avoid saying anything that could potentially weaken confidence in the dollar, but the reality is the U.S. housing market and credit squeeze haven't hit bottom yet. That's discouraging investors from holding dollar assets."