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Dollar down after weak manufacturing

Saturday, February 16, 2008

NEW YORK (AP) - The dollar extended its slide Friday against most major currencies after weak manufacturing data and consumer sentiment drove home Federal Reserve Chairman Ben Bernanke's comments about a gloomy economy and the possibility of further interest rate cuts.

Lower interest rates can jump-start a country's economy, but may weigh on its currency as traders transfer funds to countries where they can earn higher returns.

The 15-nation euro rose to $1.4678 Friday from $1.4633, but the dollar jumped higher against the pound. The British currency fell to $1.9603 from $1.9691.

The dollar also slipped to 107.69 Japanese yen from 107.93 yen and dropped to 1.0925 Swiss francs from 1.0973 francs.

A New York Federal Reserve survey showed that manufacturing conditions in the region had deteriorated, while the central bank said that the country's industrial output rose by only 0.1 percent in January. The increase in industrial production was due mostly to higher output at utility companies because of the weather.

A preliminary Reuters/University of Michigan survey showed consumer confidence sank in February to a 16-year low.

Bernanke told Congress on Thursday the economy outlook was gloomy and signaled a readiness to keep on lowering a key interest rate to shore things up.

Bernanke also told the Senate Banking Committee that the one-two punch of housing and credit crises has greatly strained the economy. And he forecast sluggish growth in the near term. Bernanke also noted that hiring has slowed and that people are likely to tighten their belts further because of high energy prices and plummeting home values.

In other New York trading, the dollar rose to 1.0091 Canadian dollars from 99.99 Canadian cents.

Posted by MOHAMED SAID at 11:18 PM  

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