US dollar plumbs new depths as intervention talk swirls

NEW YORK, March 17, 2008 (AFP) – The US dollar plumbed fresh record lows against the euro Monday as fears about America’s financial system spiked following a near collapse of Bear Stearns, prompting speculation about a possible central bank intervention.

The single European currency briefly soared to a record 1.5905 dollars in Asian trading before falling back to 1.5725 in late US trading, compared with 1.5669 dollars late Friday.

The dollar was swapping hands at 97.32 yen, down from 99.18 yen late Friday, although it had earlier fallen as low as 95.75 yen in early Tokyo trade, a level not seen since September 1995.

“Panic liquidation consumed currency trading at the start of the week as the news that Bear Stearns was being sold to JPMorgan Chase for a mere two dollars a share sent shivers through global capital markets,” said Boris Schlossberg, a senior currency strategist at Forex Capital Markets.

“The price action over the past several days has been so extraordinary, that many traders feel that central banks will have no choice but to respond if the selling continues,” Schlossberg said.

Asked about a potential intervention to help shore up the sinking dollar, US Treasury Secretary Henry Paulson told reporters at the White House