London, April 20 (Bloomberg) -- The dollar dropped to a nine- day lowagainst the euro on concern a surprise Federal Reserve interest cut thisweek indicates the U.S. economy is weaker than previously thought. The dollar fell to as low as 90.19 U.S. cents per euro, from 89.16 in Londonlate yesterday. It recently traded at 90.17. That brings its drop in the pastthree days to 2.1 percent. Against the yen, the dollar was at 121.91 yen perdollar from 121.69. ``The U.S. economic environment has deteriorated sharply,'' said AudreyChilde-Freeman, an economist at CIBC World Markets, who said the dollarcould fall to 91 U.S. cents today. ``The Fed cut between meetings was notreassuring.'' The dollar extended a decline sparked by the Fed's half-point interest-ratereduction, the fourth this year. Some analysts saw Wednesday's cut as anindication of the extent of the U.S. slowdown. Better growth prospectselsewhere may weaken the dollar by attracting investors to non-dollarassets. Wednesday's cut brought the U.S. benchmark rate to 4.5 percent. That'sbelow the euro-zone's rate of 4.75 percent for the first time since the singlecurrency began, which could also hurt demand for fixed-income investmentsdenominated in dollars. Still, Childe-Freeman sees euro gains against the U.S. currency beinglimited by concern the European Central Bank will resist pressure to followthe Fed in cutting interest rates soon. `` There is no signal that the ECB is ready to deliver a rate cut,'' she said.``They are not concerned with the potential drag from the global slowdown.They should cut.''
Yen Loss
The yen posted its biggest loss in two weeks against the dollar asJapanese Finance Minister Kiichi Miyazawa indicated the nation may notwant its currency to strengthen much more. The yen fell as low as 122.15 per dollar after jumping above 121 for the firsttime since March 15. ``We are carefully watching'' the yen's 3 percent gains this week, Miyazawasaid at a regular press conference. Traders said they took that to mean he'sconcerned that a stronger yen could derail Japan's economic recovery bymaking exports less cost- competitive. ``Miyazawa is warning about the relative strength of the yen,'' said RayAttrill, director of analysis at 4CAST Ltd., in an interview on BloombergTelevision. ``Japanese officials don't want to see the yen much away from125.'' The yen tumbled 3 percent in a week, to a 2 1/2-year low of 126.84 perdollar April 2. Then, Haruhiko Kuroda, the finance ministry's currency chief,said the yen's drop had been ``too rapid,'' and suggested the governmentmay buy yen to halt any further slide. A weaker yen could hurt economiesin neighboring countries, analysts said.