Dollar fell to an all-time low of $1.3068 against euro on Wednesday. Against yen, it slipped to 103.66, the lowest level since April 1. Market analysts contemplate the possibility of dollar-euro exchange rate reaching $1.35 and 100 yen within months.

 

European financial policy makers are blaming US surging current-account deficit for the imbalance in the currency markets

 

U.S. Treasury Secretary John Snow declared that slow economic growth in Europe and Japan was at fault. He was sceptical about the possible joint effort to revitalise the greenback, suggesting that Europe should deal with its own economic problems, rather than hoping for help to come from Washington. European economic recovery seems to be losing momentum, with France and Germany’s economies growing a meager 0.1% in the last quarter, and a stall in domestic demand makes them heavily dependent on exports to spur growth.

 

So-called G-20 meeting will start tomorrow. G-20 is a group that includes G-7 along with the biggest emerging economies. Exchange rates are likely be discussed, according to European and Japanese officials, but the possibility of a coordinated move to push up the value of the dollar seems remote.

 

The dollar-yen rate will probably decline on speculations that Japan will not sell large amounts of currency as it did in the first quarter of 2004. Bank of Japan reported to have sold a record 32.9 trillion yen ($317.1 billion) in the fiscal year ended March 31. Finance Minister Sadakazu Tanigaki promised to intervene only in case of “unusual” currency moves.