LONDON, Jan 14: The dollar slumped to a near record low against the euro on Monday on growing expectations the Federal Reserve will cut interest rates again this month to bolster the battered US economy, dealers said.

They said with the main focus in Europe being inflation, the European Central Bank is unlikely to cut its rates soon while the Fed is widely expected to reduce lending rates quite substantially.

On that basis, investors buy the euro for its higher yield, putting the dollar, and also the pound, with Britain likely to cut rates too, under severe pressure.

“The dollar (is tumbling) against all major currencies as markets increasingly expect an aggressively dovish Federal Reserve to slash interest rates by at least 75 basis points in the next two months, with the probability of a 50 basis point rate cut before the next meeting also rising,” said Ashraf Laidi at CMC Markets.

In late European trade on Monday, the euro was at 1.4874 dollars, slipping back from 1.4909 dollars in early deals but up sharply from 1.4775 dollars in New York on Friday. The euro hit a record high of 1.4967 dollars on November 23. The dollar was at 108.20 yen, up from 107.73 yen early Monday but still down from 108.81 yen late on Friday.—AFP