Dollar dives on rates hint

THERE was no respite for the battered dollar today as it tumbled to yet another record low against the euro after a senior Federal Reserve policymaker signalled that US interest rates would remain low for some time to come.

The comments, from Fed governing board member Ben Bernanke, helped drive the dollar down to 1.2695 - its lowest since the single currency was launched five years ago. Against sterling, it hit an 11-year trough of 1.802.

The dollar has been sliding in recent weeks on fears about America's ballooning current account deficit.

'I think policy is currently quite accommodative. I think it can remain quite accommodative for a while to come,' Bernanke said. US interest rates have been at 1%, their lowest since 1958, since June.

Gold benefited from the dollar's fall, surging to a 14-year high of $418.25 an ounce. A weaker dollar makes dollar-denominated bullion a cheaper investment for euro holders.

Moody's warned that consumer debt and the housing market posed a threat to Britain's economic outlook as it reaffirmed the UK's top-notch Aaa credit rating.

'Despite an absence so far of any indications that households may have difficulties in servicing their debts, their debt-to-income ratios represent a certain vulnerability in the event of rising interest rates,' Moody's said.

'This, together with a potential adjustment process in house prices, constitutes a risk for the future development of private consumption and employment and overall growth in the UK.'

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