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 18 Mar US economy facing sharp decline
US Treasury Secretary Hank Paulson has admitted that the US economy is facing a "sharp decline."
Addressing the press today, Paulson said: "We know we're in a sharp down-climb and there's no doubt that the American people know that the economy has turned down."
The news comes amidst reports that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.
An American tourist in the Netherlands was quoted in the press as saying: "Our dollar is worth maybe zero over here. It's hard to find a place to exchange. We have to go downtown, to the central station or post office."
Currency dealers said small currency exchanges bureau’s which operate buy/sell spreads that make it easier for them to make money, may be wary of the US currency because they don't want to be caught holding dollars that could be worth less by the time they can sell them.
The dollar hovered near record lows on Tuesday, with one euro worth around $1.58 compared to $1.47 a month ago.
Analysts said the US Federal Reserve is expected to slash interest rates later on Tuesday to help boost confidence in financial markets.
Economists are forecasting that the benchmark US interest rate will be cut by up to one percentage point from 3% to 2%. Interest rates have already been cut from 5.25% to 3% since mid-September in a bid to boost the economy.
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