Gold News

US Dollar falls to 31-year low

The US dollar has dropped below the value of its Canadian counterpart as a combination of factors brought the greenback to its lowest rate against its neighbour for 31 years.

Market enthusiasts will have to look back as far as 1976 to see the last time that the Canadian dollar fetched the US$1.0267 it rose to this morning (October 12th) in Toronto.

Canadian dollar strength has come from an increased demand for commodities purchased in the currency, while weakness on the American side has been an upshot of Fed rate cuts and the ongoing sub-prime fall-out.

With the US dollar falling again and again against Canadian, European and a host of other currencies, many have suggested that a weak dollar is tolerable and even desirable to the Fed and the US government as they look to boost exports.

Comments emerging from the Fed have added fuel to the fire, with FOMC voter Eric Rosengren suggesting that the risk of inflation from higher priced goods coming into the US was not particularly worrying, due to competition keeping prices adjusted to current US levels.

Meanwhile, investors and market-watchers remain in quandary over prospects for the coming months as the Fed's next move on interest rates arouses hot debate.

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