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Dollar Declines for 7th Straight Day to New Record Low Against Euro


Financial markets have steadied since the September 18 cut in short-term US interest rates. But, reports VOA's Barry Wood, the dollar continues to fall while the prices of raw materials rise.

The dollar traded Friday at $1.42 to the euro. It is again the lowest level the dollar has reached against the euro, used by 13 European Union countries. Currency traders expect the dollar to decline further.

But while the dollar has weakened, commodity prices have risen sharply. The closely followed Commodity Research Bureau index of commodity prices in September registered its biggest monthly advance in 32 years. The index climbed 8.7 percent to 334. The CRB index mostly tracks the prices of energy, grains and precious metals.

Gold Friday rose to its highest level since 1980. The metal was up over $10 to $750 an ounce. Wheat is at a record price of $9.51 a bushel. And oil ended the week at just over $83 a barrel, only pennies below its record high touched earlier this week.

Bob Froelich, a money manager in Chicago, says the Federal Reserve is focusing on weakness in the US economy and attempting to stimulate economic activity by cutting interest rates. Froelich says the inflationary impact of high commodity prices is less important to the central bank than maintaining economic growth. Froelich sees more interest rate cuts in the months ahead.

"There is no way in the world they can sit on the sidelines," said Bob Froelich. "The greatest risk [to the economy] is of not doing enough, not doing too much. They can take it back in a heartbeat. I think we're on a path to see at least another 75 basis points cut between now and the end of the year."

Froelich spoke on Bloomberg Television.

Currently, the US economy is growing at about a three percent annual rate. However, turbulence in the banking sector, weakness in housing and mixed readings on consumer confidence have caused some forecasters to predict falling or even negative growth over the next 12 months.