By PAUL THARP and MARK DeCAMBRE
The greenback tumbled to its lowest level of the year on global fears that Uncle Sam is borrowing too much with credit that's already stretched too thin.
Investors around the world dumped their hoards of dollars in favor of other currencies and under-priced stocks and corporate bonds, as they moved away from the belief that the dollar remained a haven for investors.
Traders pushed the euro and yen past the greenback after Standard & Poor's shocked the world by issuing a negative outlook on the UK's debt rating, which puts that country's AAA rating in jeopardy.
That such a threat now looms over Britain stoked fear among investors that the US could suffer a similar fate.
"We've been spared so far, but markets now are starting to show how worried they are," said Peter Schiff, president of Euro Pacific Capital.
Sources told The Post that part of the pressure on the dollar might be tied to the growing perception that the US can no longer be called upon as the world's rich uncle. Indeed, Uncle Sam's status in the world has suffered a number of knocks as a result of the credit crisis.
"The markets are beginning to anticipate the possibility" of a US credit rating cut, Bill Gross, co-chief investment officer of bond giant Pimco, told Bloomberg.
Yesterday, the euro closed up 0.8 percent to $1.3988 after breaking through the $1.40 threshold to reach $1.4051 yesterday morning. It was the weakest performance for the greenback since January.
Meanwhile, the British pound jumped to its highest level in six months, hitting $1.5933 before closing at $1.5933. The Japanese yen advanced to 94.78, vs. 94.31 a day earlier.
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Posted by Nicole Bourbaki