(Updates prices, adds comment, U.S. data, changes dateline,
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By Steven C. Johnson
NEW YORK, March 13 (Reuters) - The dollar plunged below 100
yen for the first time in over a decade on Thursday and hit a
record low versus the euro as worries deepened on Wall Street
that the United States had entered a recession.
The dollar also hit a record low against a basket of major
currencies <.DXY> and oil and gold hit all-time highs. Data
showing U.S. retail sales fell unexpectedly last month added to
the concerns about the economy. For details, see
[].
"The slowdown that we know is happening in the banks has
manifested itself on Main Street. These economic numbers are
going to get much worse," said Joe Francomano, vice president
for foreign exchange at Erste Bank in New York.
The dollar fell overnight to 99.77 yen <JPY=>, its lowest
level since 1995, before recovering to around 100.45 yen in
early New York trade, about 1 percent weaker on the day.
The euro hit a fresh record high at $1.5624 <EUR=> before
easing to $1.5575, little changed on the day,
So far this year, the dollar has shed nearly 10 percent
against the yen. Thursday's dip below the 100 level stirred
fears in some quarters that Japan could intervene in the
currency market to cap yen gains that threaten to undermine
exports, damaging corporate profits.
Those concerns sent the benchmark Nikkei <> share
average down 3.3 percent on Thursday, leaving it down nearly 20
percent so far in 2008.
Japan has a long history of intervening in currency markets
to protect exporters from an excessively strong yen, though it
has not done so over the last four years, which have seen the
economy pull out of a decade-long deflationary slump.
Japanese officials, including Prime Minister Yasuo Fukuda,
have said excessive foreign exchange moves were undesirable,
though Finance Minister Fukushiro Nukaga added on Thursday that
the latest moves reflected dollar weakness rather than yen
strength.
The dollar also hit a record low at 1.0047 Swiss francs
<CHF=>. The franc also rose against the euro, helped when the
Swiss National Bank's opted to hold its target Libor rate
steady on Thursday.
The dollar's swoon comes just two days after Federal
Reserve said it would lend primary dealers $200 billion in
Treasury securities and accept a wider array of mortgage debt
as collateral.
But the initial euphoria that met the Fed's attempt to get
money flowing again in tight credit markets has faded, with few
expecting it to have much long-term impact.
News on Thursday of more credit market stress -- this time,
at Carlyle Capital Corp, which defaulted on about $16.6 billion
of debt -- added to those concerns, and kept markets expecting
more Fed interest rate cuts.
"The economic situation in the U.S. is really black, the
market is now expecting more and more cuts from the Fed and we
have more and more news of financials experiencing
difficulties," said Carole Laulhere, currency strategist at
Societe Generale in Paris.
"Even if the Fed tried to give liquidity to the market at
the beginning of the week, it was not enough to restore the
confidence of market participants, and I think risk aversion
will continue for the time being."
(Additional reporting by Gertrude Chavez-Dreyfuss in New
York, Toni Vorobyova in London and Eric Burroughs in Tokyo;
Editing by Walker Simon)
