Dollar Tumbles to 20-Month Low Against Euro on Slowdown Concern (Min Zeng)

  By Min Zeng

  Dec. 2 (Bloomberg) -- The dollar tumbled for a second consecutive week, dropping to the lowest level against the euro since March 2005, after declines in manufacturing and consumer confidence raised speculation the Federal Reserve will cut borrowing costs early next year.

  ``The U.S. economy continues to soften,'' said Brian Garvey, senior currency strategist in Boston with State Street Global Markets, the custodian of $10.7 trillion of assets. The ``interest-rate differential is collapsing for the dollar. You are going to see the dollar remain on the downside.''

  The dollar dropped 1.8 percent to $1.3331 per euro. It touched $1.3348 yesterday, the lowest since March 2005. The U.S. currency also fell 0.5 percent to 115.33 yen and sank to a three- month low of 114.98. The dollar slid 2.5 percent versus the British pound, its biggest weekly loss since January and weakened to as low as $1.9848, the lowest since September 1992.

  The U.S. currency has declined 3.9 percent in the past two weeks, its biggest two-week drop since April 14-28 after G-7 ministers raised concerns about U.S. structural balances and suggested Asian currencies needed to gain against the dollar.

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