Dollar May Continue Decline Against Euro

The dollar may decline to a record against the euro as lower interest rates in the U.S. than in Europe discourage some foreign investment, according to a survey by Bloomberg News.

Sixty-nine percent of the 54 strategists, investors and traders polled Friday from New York to Tokyo advised buying or holding the euro against the dollar. Similar surveys predicted the dollar’s decline against the euro in the last three weeks.

“Within the next three to five years you’ll see a substantial further dollar correction,” said Edwin Truman, a senior fellow at the Institute for International Economics in Washington and a former assistant secretary of the Treasury for international affairs. “It will probably overshoot before it comes back.”

The U.S. current account deficit, at an all-time high, is “unsustainable,” said Truman, who also was staff director of the international finance division at the Federal Reserve. The U.S. needs to attract $1.5 billion a day to compensate for the gap and maintain the value of the dollar.

The dollar traded at $1.217 per euro Friday, after reaching $1.218 per euro, the weakest since the 12-nation currency began trading in January 1999. It fell 1.4% on the week and is down 14% this year.