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Dollar extends winning run amid world economy gloom
Evening Standard 15 Aug 2008
The dollar shot up again today, heading for its longest winning streak in two years amid deepening worries about the state of the global economy.
Sterling fell 1.1 cents to $1.8589, marking its 11th day of falls against the US currency. The euro also extended its losses to a six-month low against the dollar, down 0.86 of a cent at €1.4734.
The pound's fall has been as rapid as it has been steep. in late July a pound was buying more than $2.
While the dollar has made big gains against all major currencies, the pound has suffered more than most, especially this week after Bank of England governor Mervyn King's downbeat assessment of the economy on Wednesday.
He painted a picture of soaring inflation and no economic growth - what he described as a chill in the economic air.
Unemployment rose more in July than at any level in almost 16 years, adding further fuel to concerns about a serious economic crisis looming.
Today's fall in the pound marked another new 22-month low and extends the longest run of successive daily falls in more than 37 years as the currency corrects the extraordinary weakness of the dollar in the past six months.
The strengthening dollar could be good for London's economy, as it will encourage more Americans to come to the capital, although the economic malaise in the US is still likely to hamper the number of visitors.
The growing weakness of the European economy was also starting to hit the london tourism and leisure industries. The number of foreign tourists visiting the UK in the second quarter of the year fell 5% from the previous quarter. in the year to the end of June, numbers fell 3%, office for national Statistics data showed.
Commodities were hit again. Gold plunged below $800 an ounce for first time in eight months and silver had its biggest fall in two years.
"There's been a reshuffle of assets away from commodities," said Jon nadler, senior analyst at Kitco Minerals & Metals. Oil, copper and corn prices also tumbled sharply, with the price of london Brent crude down $1.59 a barrel at $112.09.
