Dollar Trades at Lowest Level since August 2008 on Risk Demand

The dollar may extend its decline after trading at its lowest level in almost 14 months against the currencies of six major U.S. trading partners as signs of global economic recovery spur demand for riskier assets.

The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said yesterday, the region’s economy is emerging from a period of “free fall”. The rand posted the best performance against the greenback among 10 European, Middle Eastern and African currencies as investors sold dollar assets to earn higher yields.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish Krona, was at 75.903 at 6:05 a.m. in Tokyo, after falling yesterday as much as 1 percent to 75.767, the weakest level since August 2008.

The greenback extended its decline even as policy makers called over the past week for strength in the world’s main reserve currency. Read more…

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