Dollar falls on Bernanke comment

The dollar hit record lows against the euro and other major currencies this morning amid worries about the US economy and expectations of further rate cuts.

The dollar index hit a record low of 73.560 and was en route to its biggest weekly loss in more than two years, of 2.5 per cent. The dollar hit a historic low at 1.0474 Swiss francs and a three-year low at 104.23 yen.

A surprisingly large rise in weekly US jobless claims today and confirmation that the world's biggest economy barely grew in the final quarter of 2007 fuelled recession worries. This has contrasted with upbeat releases from other countries, such as Germany.

Markets are now fully pricing in a 50 basis point rate cut from the Federal Reserve in March.

The euro set a fresh record high at $1.5238 according to Reuters data, after powering through the psychologically key $1.50 mark on Wednesday.

Economic woes, coupled with Fed chairman Ben Bernanke's warning on the health of small US banks yesterday, weighed on stock markets and risk appetite, to the benefit of low-yielding currencies like the yen and Swiss franc.