Euro Falls to Six-Month Low

The euro fell to a six-month low against the dollar after a report showed German business confidence dropped in August more than economists forecast., Bloomberg 8/26/2008 6:07:18 AM

The euro dropped 0.9 percent to $1.4617 at 8:53 a.m. in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14. Europe's currency fell 0.6 percent to 160.29 yen, from 161.26 yesterday, after reaching 159.99, the lowest since May 12. The dollar increased 0.3 percent to 109.65 yen, from 109.30.

The greenback has risen against all of the other major currencies this month on evidence the economic slowdown that began in the U.S. is spreading to the rest of the world. The U.S. currency's gains range from a 10.4 percent advance against the Australian dollar to a 1.4 percent increase versus the Mexican peso.

The 15-nation euro has lost more than 8 percent versus the dollar since touching an all-time high of $1.6038 on July 15, decreasing as the European economy contracted in the second quarter and crude oil dropped more than 20 percent from a record $147.27 a barrel set last month.

The Ifo institute's German business confidence index declined this month to 94.8, the lowest level in three years, from 97.5 in July. The median forecast of 35 economists surveyed by Bloomberg News was for a decrease to 97.2.

The euro dropped for a second day versus the yen and declined 0.4 percent to 2.3987 Brazilian reais as traders added to bets that the European Central Bank will cut interest rates next year. The implied yield on Euribor futures contract expiring in September 2009 fell 9 basis points, or 0.09 percentage point, to 4.29 percent. The yield averaged 18 basis points above the ECB's benchmark, currently 4.25 percent, from 1999 to August 2007.

Euro Falls to Six-Month Low