|Struggling dollar falls to lowest ever level against the euro
|Single currency breaks $1.35
Appreciation of euro weakens purchasing power of Middle Eastern consumers
The dollar slumped to an all time low against the euro in late European trading, tumbling to $1.3502 against the resurgent single currency.
The greenback plunged to its record low amid fears Washington won't take measures to counter the dollar's weakness and the publication of a raft of poor U.S. economic data.
Comments by U.S. Treasury Secretary John Snow earlier this month, when he spoke of his "deep respect for the way markets perform," have been interpreted as a signal that Washington is content with the weak dollar and given rise to a fresh selling spree.
The latest plunge means the euro has risen by almost 15 percent against the greenback over the last year.
The appreciation of the euro will not have a major impact on most Middle Eastern countries, with the exception of those states that import heavily from the European continent.
Arab Gulf states will be the least affected by the surge because of high oil prices.
Europe is one of the main trading partners for Lebanon and some Arab states and this will probably affect imports.
Many Lebanese who import European made goods complain of low sales, saying if the dollar continues to slide against the euro they will be obliged to shift to U.S.-made goods.
The appreciation of the euro will only mean that the purchasing power of consumers in the Middle East will be lower than before if they decided to buy European made goods.
Economist Louis Hobeika earlier said the European Central Bank may intervene if the euro reached $1.50. But Hobeika does not believe the euro will hit $1.50 in the near future.
In addition to concerns about America's fast expanding current account and budget deficits, dollar sentiment has also been hit by the latest economic data coming out of the U.S.
Figures released yesterday revealed that U.S. consumer spending, which accounts for around two-thirds of U.S. economic activity, posted a meagre 0.2 percent increase last month, well below expectations of a 0.5 percent rise.
The latest unemployment numbers from the U.S. Labor Department showed a seasonally adjusted 17,000 jump in jobless claims to 333,000 for the week ending Dec. 18.
Osama Habib and Michael Glackin
The Daily Star