BERLIN – The U.S. dollar hovered Monday near its all-time low against the euro (search), which traded at just more than $1.30 with markets cautious ahead of the Thanksgiving holiday in the United States.
Despite the failure of a weekend meeting of the world's top finance officials to send a signal of concerted action to halt the dollar's slide, the euro stayed below the record of $1.3074 reached last Thursday. It traded at $1.3045 in the afternoon, off its high for the day of $1.3052.
"I guess there's just a lack of impetus," with markets showing little appetite to take new risks ahead of Thanksgiving even though the pressure on the dollar remains "negative," said Mark Austin, a currency strategist at HSBC in London. "The market has been selling dollars aggressively across the board for some time now."
He noted that the lukewarm statement from the meeting of finance ministers and central bank governors from the Group of 20 (search) key industrial and developing countries — which made no specific mention of the dollar — was widely expected.
The statement said the group "underscored the importance of medium-term fiscal consolidation in the United States, continued structural reforms to boost growth in Europe and Japan, and, in emerging Asia, steps toward greater exchange rate flexibility."
Concern over the U.S. trade and budget deficits has been a major factor in the dollar's decline, and U.S. Treasury Secretary John Snow said Sunday he stressed to his counterparts at the Berlin meeting that "the United States is dealing with its deficit."
The slide has worried European officials who fear their fragile, export-led recovery will be hurt. Economists say U.S. President George W. Bush has little incentive to support the dollar because its drop helps U.S. exporters.
In Tokyo on Monday, the stock market's main index slumped more than 2 percent — its steepest drop in three months — as a slowdown on Wall Street and the dollar's drop against the Japanese yen combined to push export-oriented issues lower. The dollar traded between 102.95 yen and 103.42 yen in Tokyo.
A weak dollar also hurts Japan's economy by making Japanese exports to the United States more expensive, and erodes exporters' overseas earnings when they are converted back to yen.
"The dollar won't move up unless Washington comes up with specific ways to correct the nation's imbalances," said Ryohei Muramatsu, head of currency trade at Commerzbank's Tokyo branch.
In New York, continued weakness in the dollar contributed to push stocks lower Monday. Investors worried that the free-falling dollar, which has been regularly setting record lows in recent weeks, could harm the inflow of foreign investment into U.S. stocks and bonds.