Concern about current account deficit push currency to 8-month low vs. euro, 6-month low vs. yen.
October 25, 2004: 6:25 AM EDT
LONDON (Reuters) - The dollar extended last week's losses and fell to an eight-month low against the euro, an eight-year lows versus the Swiss franc and a six-month low versus the yen Monday on concerns about the U.S. current account deficit.
The dollar traded at $1.2822, its lowest level since Feb. 18, the day when it fell to a record low. The dollar also fell to its weakest level in eight years at 1.1949 Swiss francs.
Against the yen, the dollar weakened to its lowest level in half a year at ¥106.34.
Dollar bears were encouraged last week by a flurry of comments from European policymakers saying they were not concerned about the greenback's fall and the resulting surge in the euro.
On Monday, the euro came within a cent of its February record high of $1.2927.
"It seems everybody on both sides of the dollar equation is happy to see a weaker dollar, to offset the imbalances in the U.S. economy and the impact of higher oil prices," said Aziz McMahon, FX strategist at ABN Amro in London.
Commenting on the yen's rise, Finance Minister Sadakazu Tanigaki said current foreign exchange moves reflected the dollar's weakness, not the yen's strength.
The dollar lost ground to other major currencies as well, as broad concerns over the structural problems in the U.S. economy left few investors willing to support it.
Versus the British pound, the dollar fell to a two-month low of $1.8441.
"People are talking about all kinds of things that are bad for the dollar," said Mitsuo Imaizumi, deputy general manager of foreign exchange and international bonds at Daiwa Securities SMBC in Tokyo. "We have the twin deficits and officials hinting at a weaker dollar."
Some of last week's strongest comments came from San Francisco Federal Reserve President Janet Yellen, who said that despite the large and growing deficit the dollar's value was still "relatively high," providing more fuel for dollar bears.
Investors were also eyeing high oil prices, which hit a new record above $55 a barrel Monday, as many analysts warn that costly fuel could damage the U.S. economy.
This in turn stoked concerns that the U.S. could fail to attract enough foreign cash to plug its current account deficit. And that deficit is already under upward pressure from high oil prices.
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