Thursday, September 20, 2007

US Dollar Continues to Weaken

The dollar took another fall on currency markets today, reaching one-to-one parity against the Canadian dollar for the first time in 30 years (since 11/1976) and falling to a new low against the Euro. The Canadian dollar is known as the "loonie" because of the bird pictured on the one-dollar coin.

The half-point cut in U.S. interest rates earlier this week had the effect of further weakening the dollar versus other currencies by reducing the cash yield on dollars. A lower dollar can make travel more costly for U.S. residents and can also pose the risk of making imported goods more expensive over time.