Dollar Crash

The dollar fell to the lowest since 1995 against the yen on speculation fund managers and central banks will cut holdings of U.S. assets as reports add to evidence the economy is entering a recession.

The currency also slid to a record low against the euro as U.S. President George W. Bush said the dollar is ``adjusting'' and its decline isn't ``good tidings.'' The yen's gains accelerated after Carlyle Group's mortgage-bond fund said it was unable to reach an agreement with lenders, who will ``promptly'' take over all of its remaining assets.

``Investors are getting out of dollar assets and this is going to lead to a dollar crash,'' said Tetsuhisa Hayashi, chief currency manager of foreign-exchange trading in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's largest publicly traded lender. ``The U.S. economy is getting worse.''

The U.S. currency fell to 100.58 yen at 1:06 p.m. in Tokyo after reaching 100.22, the lowest since Nov. 13, 1995, from 101.79 in New York late yesterday. The dollar fell as low as $1.5586 per euro, the weakest level since the European currency's 1999debut. The euro fell to 156.36 yen from 158.30.

The dollar bought 1.0112 Swiss francs, a record low. The British pound was little changed at $2.0268. The Australian dollar rose to 93.57 U.S. cents from 93.33 cents after data showed companies in the Southern Hemisphere country hired extra workers for a record 16th month. The Singapore dollar rose to a record of S$1.3826 per dollar. The yuan gained to 7.0972 against the dollar, strengthening beyond 7.1 for the first time since the fixed exchange rate ended in 2005.

Carlyle Talks

The yen climbed as much as 1.5 percent against the dollar as Amsterdam-listed Carlyle Capital Corp. said in an e-mail statement that talks with lenders had failed. Through March 12, the company has defaulted on about $16.6 billion of debt and other borrowing agreements will also soon be breached, it said.

The Central Bank of Jordan is reducing the amount of dollars in its foreign reserves because of the declining value of the U.S. currency and the need to service debt, Deputy Governor Faris Sharaf said yesterday in an interview in Amman, Jordan. Sharaf would not provide a break down of the bank's reserves, totaling around $7 billion. The Jordanian dinar has been pegged to the dollar since October 1995 at an average price of 0.709 fils.

A Qatar central bank official denied an Emirates Business 24/7 report that Gulf-region policy makers will consider currency revaluation when they meet next week. The dollar's 10 percent drop against the euro last year has stoked inflation in the region.

China's Reserves

China wants to invest more of its reserves abroad, Minister of Commerce Chen Deming said yesterday. China's reserves are the world's largest at $1.5 trillion.

``We're probably going to remain in the situation where long-term money moves away from the dollar,'' said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp. `There is a lot of discussion in the market about China. There's also a lot of discussion about the Middle East dropping their dollar pegs. They're looking for an alternative store of wealth.''

The U.S. currency may weaken below 100 yen, he said.

U.S. retail sales rose 0.2 percent in February after a 0.3 percent gain in the previous month, according to a Bloomberg survey. The Commerce Department will release the data later today in Washington.

The Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, declined to a record low of 71.99.

`Real Trouble'

Since hitting a 4 1/2-low on June 22, the yen has rallied 24 percent against the dollar

``The dollar looks in real trouble and there is no obvious resistance level against the euro,'' said Greg Gibbs, a currency strategist at ABN Amro in Sydney. ``I don't think you can pick a level for where it will stop.''

Bush reiterated his commitment to a strong dollar in an interview with the U.S. Public Broadcasting Service and said the dollar's drop isn't ``good tidings'' for that policy.

``Bush's comments were about as lukewarm as you can get,'' said Brian Dolan, research director at Forex.com, a unit of currency trading firm Gain Capital in Bedminster, New Jersey. ``Some may have interpreted his `adjusting' comment as tacit acceptance that we're in a broad-based dollar devaluation.''

The dollar also fell as firms from Citigroup Inc. to Goldman Sachs Group Inc. said yesterday the Federal Reserve's plan to inject $200 billion into the banking system may fail to break the freeze in money-market lending.

U.S. Rates

Traders bet the Fed will cut its rate as much as 0.75 percentage point on March 18 to avert a recession. The likelihood of a reduction to 2.25 percent was 76 percent, according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent.

The Fed's measures are ``not a panacea, more like an aspirin for the dollar,'' analysts led by Daniel Tenengauzer, New York-based head of global currency strategy at Merrill Lynch & Co., wrote in a research note. ``There is a reasonable risk that this Fed move reflects the depth of their concern with U.S. asset markets.''

The dollar may decline to $1.57 per euro this month, according to a Merrill Lynch forecast released March 6.