The US dollar skidded below ¥100 and marked fresh lows against the euro on Friday as more US economic woes roiled the markets after news of an emergency loan to prop up Wall Street firm Bear Stearns.
The US currency also slid below parity with the Swiss franc for the first time ever as a tame inflation report boosted the odds for a hefty rate cut by the US Federal Reserve.
At 9pm GMT, the euro was at US$1.5669, up from US$1.5624 in New York on Thursday, but off the record US$1.5688 hit earlier on Friday.
The dollar was at ¥99.18, down from ¥100.60 to test 12-year lows, and 0.9978 Swiss francs compared with SF1.0102.
The pound was at US$2.0219 after US$2.0317.
News of a near-collapse at white-shoe Wall Street firm Bear Stearns "sent reverberations throughout all markets worldwide, not only because this is another `too big to fail' scenario, but also because it has strong implications for a domino effect in the already weakened financial services industry and beyond," said Sherry Cooper, chief economist at BMO Capital Markets.
The latest round of turmoil prompted EU leaders on Friday to call on the banks to help stabilize nerve-wracked financial markets as they also sounded the alarm about the euro's record-breaking gains.
"We would like to invite financial institutions to help reduce the instability on financial markets within their limits," Slovenian Prime Minister Janez Jansa told reporters after chairing a summit of EU leaders.
EU leaders said that sharp swings in exchange rates "are undesirable for economic growth" and that "in the present circumstances we are concerned about the excessive exchange rate move."
Dealers said that in late trading the dollar steadied slightly amid speculation that central banks might be considering intervention.
"The weakness of the dollar and its record-breaking lows may result in the first coordinated attempt in 13 years to strengthen the currency," Jordan Eburne at PNC Bank said.
"The dollar making new lows against the euro and 12-year lows against the yen has brought about complaints from ECB President [Jean-Claude] Trichet and Japanese Finance Minister Fukushiro Nukaga. The Group of Seven nations may feel the need to step in, just as they last did in 1995 when the dollar was trading at similar levels against the yen," Eburne said.
He said the weakness of the dollar "is already beginning to affect other markets, like the commodity markets, as investors lose confidence in US assets. However, an intervention isn't likely imminent just yet as the weak dollar is helping support America's economy via an increase in exports, and the strong euro has been needed to help contain inflation in Europe."
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure