No Stopping the Dollar’s Slide

• The dollar falls against the euro and the Japanese yen

• The Fed in the spotlight

• Tunis: the market is balanced

Nothing seems able to stop the fall of the greenback. Continuing its tumble, it reached 1.5688 against the euro and entered its lowest against the yen since November 1995 with 100 yen to $1. Neither the words of Henry Paulson, the Treasury Secretary, repeating that, “a strong dollar is in the interest of the United States,” nor the intervention of White House spokesman Tony Fratto, who says that George W. Bush’s recent stance for the strong dollar is not a policy shift, could reverse its decline.

Traders have been shaken by the announcement of the liquidation of Carlyle Capital after it was unable to meet margin calls in the context of tightening credit. The news has rekindled fears in the market, erasing part of the beneficial effects of concerted intervention by central banks on Tuesday to restore liquidity in the interbank market. At the same time, the low figures for US retail sales, down from 0.6% in February, reinforced expectations of lower rates by the Fed at the next meeting of its Monetary Policy Committee, Tuesday. The probability of a decline of 50 basis points is around 45%, whereas there is a 39% chance for a decrease of 75 basis points and 15% for a dramatic decline of 100 basis points.

In Tunis, the market regained its balance in the absence of volume. The euro has risen above 1.81 dinar, while the dollar has fluctuated around 1.16 dinar.