March 08, 2008	Saturday	Safar 29, 1429

LONDON, March 7: The dollar plunged to a record low against the euro on Friday on dismal US jobs data but later clawed back losses after the Federal Reserve said it would pump $200 billion into the cash-strapped banking system.

The single European currency soared to $1.5464, its highest reading since its creation in 1999.

The euro was later trading at $1.5334, down from $1.5381 late Thursday in New York.

The dollar was meanwhile at 102.69 yen, up from 102.64 on Thursday.

The beleaguered greenback came under heavy selling pressure on news that a faltering US economy lost 63,000 jobs in February.

The dollar later firmed a bit on news that the Fed was about to open its cash spigot to confront tightening credit sparked from the worst housing slump in decades.

“The dollar ... is now broadening its gains on the Fed announcement to step up its liquidity operations, which may reduce the likelihood of a 75-basis point (interest) rate cut this month,” said Ashraf Laidi at CMC Markets.

The Fed mounted a two-pronged offensive to combat a credit crunch as the US economy struggles with spiking foreclosures and fading consumer confidence, raising the spectre of recession.

The central bank sharply hiked the amounts available this month to a combined $100 billion in its Term Auction Facility, a programme launched in December to relieve elevated pressure in the short-term, interbank funding market.

The Fed also said it was launching a series of term repurchase transactions that are expected to reach $100 billion.

“This will immediately add liquidity directly into the banking system where it is desperately needed,” said David Kotok, an analyst at Cumberland Advisors.

Markets have been rattled this week by a barrage of bad news in the financial sector. Thornburg Mortgage, a leading home-loan firm, said it was unable to pay debt and could face bankruptcy.

Buyout giant Carlyle Capital Corporation warned on Friday that its liquidity “quickly” could evaporate because of additional repayment demands, a day after it said it had failed to meet margin calls from some of its lenders following a drop in the value of its $22 billion portfolio of mortgage-backed securities.

On the London Bullion Market, the price of gold fell to $972.50 an ounce from $974.50 late on Thursday, when it had forged a record peak at $992.05.—AFP