The New Nation - Internet Edition

AFP, New York

The dollar tumbled to a fresh record low against the euro on Friday as expectations mounted that the Federal Reserve would cut US borrowing costs again next week.

Traders said an expected interest rate cut by the Fed at a policy meeting scheduled for next Wednesday and uncertainty over US economic momentum combined to push the dollar to new lows.

The euro was swapping hands at 1.4391 dollars around 2100 GMT, up from 1.4320 dollars late Thursday.

In earlier trading, the euro had struck 1.4393 dollars, marking its highest level since the single currency's creation in 1999. The European currency has risen over 11 percent against the dollar in the past year. In late New York trade, the dollar was at 1.1639 Swiss francs, down from 1.1656 Swiss francs late Thursday.

The pound was at 2.0522 dollars, up from 2.0511, while the dollar fetched 114.24 yen, up from 114.14 yen a day earlier.

"The world angst over the depreciating US dollar is reaching new highs just as the currency is putting in new all time lows," said Andrew Busch, a currency strategist at BMO Capital Markets.

Worries about the slowing US economy, especially its housing market which has been mired in a downturn since early 2006, are weighing on the US currency.

Higher growth elsewhere and stronger interest rates overseas have also encouraged specualtors to sell off their dollar holdings in favor of currencies like the euro and the British pound.

Many economists expect the Fed to trim its key short-term federal funds interest rate by a quarter of a percentage point next week.

The central bank slashed borrowing costs by half a percentage point on September 18 to 4.75 percent in the face of the housing slump and a credit crunch that is shaking the financial sector.

Oil and gold prices have also surged strongly in recent weeks, putting further pressure on the US economy which imports a majority of its oil.

"With rising commodity prices and weak US indicators, the US economy's slowdown could prompt the beginning of a slowdown in the global economy next year," said Saburo Matsumoto, a chief foreign exchange strategist at Sumitomo Trust Bank.