Euro tops $1.55 for first time

The euro has set a new record high against the US dollar, rising above $1.55 for the first time.

Scepticism about whether the Federal Reserve's plans to provide liquidity to the banking system will work was one factor weakening the dollar. The new high was set at $1.5559 before the European currency fell back slightly to trade at $1.5552. Speculation that the United Arab Emirates is about to abandon its dollar peg also weakened the US currency. The euro chalked up its biggest daily gain in more than two years, rising 1.5%.

Analysts said there were worries that the initiative from the Fed and other large central banks would do little to ease the wider problems facing the US economy.

The fall in the dollar will make travelling abroad more expensive for Americans and it will increase the cost of imported goods.

However, it should also make US exports more competitive on world markets.

Source: BBC News