By Min Zeng
 Nov. 20 (Bloomberg) -- The dollar fell to a record low against the euro and Swiss franc on concern credit-market losses will slow economic growth, prompting the Federal Reserve to lower interest rates again this year.
Currencies in New Zealand, the U.K., Australia and Norway gained on speculation a group of six Arab nations will change their fixed exchange rates from the U.S. currency. Freddie Mac, the second-biggest buyer of U.S. mortgages, posted its largest- ever quarterly loss and said it may cut its dividend to weather ``significant deterioration'' in the housing market.
``There are lots of forces working against the dollar,'' said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``The market sentiment toward the dollar is very negative. You are going to see further declines in the dollar.''
The dollar fell 0.9 percent to $1.4789 per euro at 10 a.m. in New York, and touched $1.4814, the cheapest level since the 13-nation currency started trading in January 1999. The U.S. currency weakened 0.5 percent to 1.1093 versus the Swiss franc and reached an all-time low of 1.1070. The dollar gained 0.4 percent to 110.19 yen.
The dollar will decline to $1.50 per euro by the end of the year, according to Fullem.
Europe's single currency will trade at $1.45 by year-end, according to the median forecast of 43 analysts and brokerages surveyed by Bloomberg News.
Norway's Krone
Norway's krone was the best performer against the dollar among the 16 most-actively traded currencies, rising 1.8 percent, followed by a 1.2 percent gain in New Zealand's dollar. The krone got support as a rise in crude boosted the prospects of the world's fifth-biggest oil exporter.
The yen dropped against 15 of 16 major currencies as a rebound in global stocks encouraged investors to buy higher- yielding currencies funded by loans in Japan, known as carry trades.
The Japanese currency fell 1.2 percent to 162.93 per euro. Currencies from Norway, New Zealand and South Africa also rose more than 1 percent against the yen.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency moves erase those profits. Japan's benchmark interest rate is 0.5 percent, the lowest among industrialized nations.
`Calming Down'
``Stock markets are calming down,'' said Kenichi Yumoto, senior dealer in Tokyo at Societe Generale SA, France's third- biggest lender. ``Increased risk appetite is pushing down the yen,'' which may move between 109.30 and 110.30 per dollar today, Yumoto forecast.
The U.S. dollar has declined against all 16 most-actively traded currencies except Mexico's peso this year as the Fed cut interest rates twice to help revive economic growth amid the worst housing market slump in 16 years, and as companies reported losses on securities tied to U.S. subprime mortgages.
The dollar has lost 10.8 percent against the euro, 7.7 percent versus the yen and 9.1 percent against the franc over the same period.
Over the past five years, the dollar has tumbled 50 percent against Brazil's real, 38 percent against the Canadian dollar and 32 percent against the euro, prompting European Central Bank President Jean-Claude Trichet to say yesterday that ``disorderly'' currency moves are ``undesirable.''
The Fed
The Fed may cut interest rates again this year, futures traded on the Chicago Board of Trade show. Speculation also increased that the U.S. central bank could lower borrowing costs in an emergency meeting or ``employ some liquidity enhancing measure,'' said Neil Jones, head of European hedge-fund sales in London at Mizuho Capital Markets.
The odds of the Fed cutting rates a quarter-percentage point to 4.25 percent on Dec. 11 are 84 percent, up from 72 percent a month ago.
The Fed is scheduled to release the minutes from its Oct. 31 meeting at 2 p.m. in Washington. The central bank cut the target rate for overnight loans between banks to 4.5 percent last month, after a 50-basis-point reduction in September. The central bank is also expected to release quarterly forecasts for the economy and inflation.
To contact the reporter on this story: Min Zeng in New York at
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