Dollar Falls Further in Global Trading

The dollar continued its descent in thin global trading Friday, while foreign stock markets that held trading sessions were mostly higher.

Many foreign markets, along with all U.S. financial markets, were closed Friday in observance of the Christmas holiday.

In low-volume trading overseas, the dollar fell further against its major rivals. The euro hit a record $1.355, up from $1.349 on Thursday in New York.

The dollar also eased to 103.60 yen from 103.70.

2004 is the third straight year that the dollar has fallen against other key currencies. The last time the buck fell for three years in a row was during President Reagan’s second term, after major industrialized nations negotiated the Plaza Accord in 1985 to weaken the then-soaring dollar.

The greenback has been hammered in large part by the nation’s huge trade and budget deficits, which send a tidal wave of dollars abroad.

Many currency traders also believe that the Bush administration tacitly supports the idea of a weaker dollar because it makes the prices of U.S. exports cheaper abroad, which over time may reverse the trade deficit.

“People are going to come back in the beginning of next year and pick up where they left off, pushing the dollar down,” said Robert Rennie, currency strategist at Westpac Banking in Sydney, Australia. “There’s little the U.S. wants to do about it.”

Although U.S. exporters are helped by the dollar’s slide, Americans’ purchasing power abroad is dwindling.

The euro’s value has rocketed from a low of about 83 cents in October 2000. A hotel room in Paris that cost $100 when the euro was at 83 cents now would cost $163 if the price in euros remained the same.

In foreign stock trading Friday, Japan’s Nikkei-225 index continued its recent rally, rising 156.04 points, or 1.4%, to 11,365.48, its highest level since Oct. 6.

British and French shares traded in half-day sessions and closed modestly higher.

The Canadian and Mexican markets also were open for abbreviated sessions. Canada’s S&P;/TSX index jumped 52.22 points, or 0.6%, to a four-year high of 9,287.40.

Mexico’s main share index, the IPC, remained on a hot streak, gaining 54.32 points, or 0.4%, to a record 12,802.77.

The dollar’s weakness has padded returns on foreign stocks for American investors this year. Measured in dollars, the Japanese market is up 10% this year, the British market is up 15%, France is up 15%, Canada is up 19% and Mexico is up 47%.

By contrast, the U.S. Standard & Poor’s 500 index is up 8.8%.