Dollar Falls to Lowest in Almost Three Years on Bank Concern  (29-02-2008)

Feb. 29 (Bloomberg) -- The dollar fell to the lowest in almost three years against the yen on signs credit-market losses are spreading after Federal Reserve Chairman Ben S. Bernanke highlighted risks to the U.S. economy.

The currency also dropped to a record low against the euro after Bernanke told a Senate panel that a housing slump may cause smaller U.S. banks to fail and unemployment to rise. The yen rose against the South African rand and Australian dollar as Asian stocks declined, prompting investors to reduce holdings of higher-yielding assets funded with loans in Japan.

``This is the Bernanke shock, causing much faster dollar depreciation than expected,'' said Michiyoshi Kato, a senior vice president of currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest publicly traded lender by assets.

The dollar slumped to 104.28 yen, the weakest since May 2005, before trading at 104.33 as of 7:53 a.m. in London, from 105.37 late in New York yesterday and 107.17 a week ago. It fell to $1.5239 per euro, from $1.5193 reached yesterday.

Source: Bloomberg