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November 24, 2007, 2:49 pm
The depths of dollar despair
The dollar’s dizzying fall continues. The greenback dropped against the euro and yen Friday, as investors continue to flee from the U.S. economy’s declining interest rates and weakening economic fundamentals. The euro is worth almost $1.50 — up 11% for the year. Meanwhile, the yen is rising as well, causing some speculation that the yen carry trade — in which investors borrow money cheaply in yen and invest it in nations with higher interest rates — could unwind, causing a new wave of volatility. David Merkel says the dollar appears fairly valued on a purchasing power basis, but warns that it will probably be years before the dollar reaches a sustainable level against other currencies.
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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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