Dollar to Fall in 2010 on Record Low Interest Rates

The U.S. dollar touched its lowest level in more than a year versus most of its main rival currencies as speculations suggest that the Federal Reserve will maintain borrowing costs in a historic record low, as the economy still urges for stimulus to provide a more solid recovery.

Several reasons are impacting further the greenback’s outlook among traders in currency market, as risk appetite remains strong, favoring high-yielding currencies in commodity-linked and emergent countries, as well as the dollar has been losing its status as the world main reserve currency, with interest rates at an all time historic low, forcing most of the investors to avoid assets in the North American nation, and shift the nature of their portfolio towards risk and more interesting opportunities overseas, setting the dollar to a new record low in 2009 this week, extending a losing streak that stared in the very beginning of the present month.

The dollar forecast for 2010 tends to be rather negative, according to analysts, as the Federal Reserve has still not indicated that interest rates will be hiked anytime soon, fact which could add confidence and attract investors back to assets in the United States. To some extent, the U.S. government is being rather tolerant with its weakened currency, since they need to make their products more competitive to export markets, and consequently recover the economy in a faster pace.

EUR/USD traded at 1.5033 as of 15:15 GMT from a previous rate of 1.4973 yesterday. AUD/USD traded at 0.9317 from 0.9283.

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