BBC

Friday, 16 March, 2001, 12:57 GMT Euro falls below $0.90

The euro has dipped below 90 US cents for the first time this year as currency traders took flight and bought dollars as a safe haven.

The euro hit a three-month low at $0.8928 from $0.8967 in New York overnight when the single European currency fell through the 90 cent mark for the first time this year.

Analysts said investors were favouring the dollar because of the perception that it is a reliable investment in times of trouble.

The sharp falls on global stock markets, fears of economic recession and a string of profit warnings have all contributed to the trader's feelings of uncertainty.

Taking a pounding

The flight to the US has also taken the UK pound to a three-and-a-half month low against the dollar, while the big falls on the Japanese stock markets have pushed the yen to a 22-month low.

Sterling has fallen to lows of $1.4280 but hit four-week highs against the euro as traders pulled out of the single currency at a faster rate.

Over the past week, since the major falls on the stock markets occurred, the euro has remained fairly stable against the yen.

Expectations that the US Federal Reserve could cut interest rates on Tuesday by up to 0.75% to try an boost the US economy has added to dollar buying.

The European Central Bank left interest rates unchanged on Thursday at 4.75%.

-- Rachel Gibson (rgibson@hotmail.com), March 16, 2001