Euro soars as dollar nosedives

THE dollar sell-off gained fresh momentum in latest trading with the greenback tumbling to its lowest level for nine years against the currencies of its main trading partners.

Among the biggest gainers is the euro, leading to a warning from European Central Bank president Jean-Claude Trichet that the surge in the single currency was 'not welcome' and 'brutal'.

His comments in Basle brought a brief respite but last night the euro was trading a shade under the $1.30 level.

The pound has been dragged up against the dollar and stood at $1.86. But it continues to weaken against the rampant euro which is now worth 70p.

There has been no indication that the Bush administration is willing to do anything to prevent the dollar's fall as it seeks to plug its current account deficit which rose to $166.8bn in the second quarter.

The latest tumble has come despite the improved employment situation in the US and the expectation that the Federal Reserve will raise US interest rates by a quarter point to 2% tomorrow.

Currency analysts believe that the dollar's fall will continue. In a change of view, Morgan Stanley's Stephen Jen says: 'The dollar will remain vulnerable in the coming weeks.' He predicted that dealers would chase the dollar lower with the 'blessing' of the US.

There is no indication that central banks in euroland or Japan are willing to step in to try to halt the greenback's decline by intervention.