The Greenback has slumped about 8.2 percent versus the euro and Japanese yen in 2008 as oil prices rose to an all-time high of $115.54 a barrel compared with $95.98 on Dec. 31. Against the pound, it has dropped 0.2 percent. Interest-rate cuts by the Federal Reserve to keep the U.S. economy out of a recession have also reduced demand for dollar-denominated assets. Barclays Capital forecast the dollar will drop 2.5 percent against the euro in three months as record oil prices increase the U.S. import bill and prevent the European Central Bank from cutting interest rates because of inflation.

The securities unit of Barclays Plc, the U.K.'s third- biggest bank, predicts the dollar will fall to $1.63 per euro, compared with a previous estimate of $1.50, analysts led by David Woo, London-based global head of currency strategy, wrote in a research note yesterday. Against the pound, the U.S. currency will weaken to $2.05 versus $1.97. 'The U.S. dollar is locked in a vicious circle,' they wrote. The currency's drop is causing higher oil prices as oil nations seek to preserve their revenues and 'this in turn leads to further dollar weakness as the European Central Bank becomes even less likely to follow Federal Reserve easing.'

The U.S. currency traded at $1.5883 per euro as of 7:45 a.m. in London from $1.5908 in New York yesterday, when it reached $1.5983, the lowest level since the European single currency's debut in 1999. Against the pound, it traded at $1.9896, from $1.9912 yesterday and was at 102.44 versus the yen. Producer prices in Germany rose 0.7 percent in March from February, while increasing 4.2 percent from March last year, the Federal Statistics Office said. The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. Germany's producer price index stood at 123.4 in March compared with 122.6 in February and 118.4 in March 2007, the office said.

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