Dollar tumbles against yen as credit fears deepen

The dollar fell to
fresh 12-1/2-year low against the yen and a record low against the euro on
Friday after Bear Stearns said its liquidity position had deteriorated,
increasing fear of a deep U.S.
recession.
The dollar fell to
99.58 yen, its lowest levels since 1995, after a Bear Stearns executive said
the bank’s liquidity position had deteriorated over the past 24 hours. It last
traded at 100.05 yen, down 0.4%.
The euro hit a new
all-time record at $1.5688 before easing to $1.5644, unchanged from late
Thursday.
“The market is
concerned about Bear Stearns saying that their liquidity positions has
deteriorated,” said Steven Butler, director of foreign exchange trading at
Scotia Capital in Toronto.
“It means things are really getting worse for the U.S.
economy.”
The Bear Stearns news
came as J.P. Morgan and the New York Federal Reserve said they were planning to
provide financing to Wall Street bank.
Data showing U.S. consumer
confidence fell to fresh multi-year lows also weighed on the dollar and
increased fears that the economy may already be in a recession.
Earlier, a report
showing underlying U.S.
inflation was unchanged in February also boosted the case for more intersect
rate cuts from the Federal Reserve, which has cut rates from 5.25% to 3% since
September.
“The Fed has
turned a blind eye to inflation in hopes that slower growth would bring prices
back in line, and this report allows it to maintain that policy,” said
Michael Woolfolk, currency strategist at the Bank of New York Mellon.

Spot gold sets
historic high above $1,000-mark

Spot gold raced higher
to scale an historic peak above key $1,000-mark on Friday after the dollar hit
a record low after weak U.S.
data and deepening financial market troubles in the United States.
Spot gold surged to a
high of $1,005.50 an ounce and was quoted at $1,003.10/1,004.00 at 1417 GMT,
compared with $991.00/991 on Thursday.