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Originally published Tuesday, November 23, 2010 at 7:59 AM

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Euro sinks to 2-month low after Irish bailout

The euro tumbled below $1.34 in New York for the first time since September as investors remained wary of debt problems facing Ireland, Portugal and Spain.

The Associated Press

NEW YORK —

The euro tumbled below $1.34 in New York for the first time since September as investors remained wary of debt problems facing Ireland, Portugal and Spain.

A military clash between North and South Korea on Tuesday also helped support the dollar. The dollar jumped as high as 1,170.90 South Korean won from 1,127 won late Monday.

The euro fell as low as $1.3362, its weakest level against the dollar since Sept. 24. It traded at $1.3374 in the late afternoon versus $1.3616 Monday. It was the biggest one-day drop since Aug. 11.

Ireland on Sunday asked for a massive loan from the European Union, as Greece did in May. Investors remain anxious that other countries in Europe will also have to seek aid.

In the U.S., minutes from a meeting of the Federal Reserve showed a more pessimistic forecast for the economy. Officials cut their outlook to 2.4 to 2.5 percent growth in 2010, down from a previous forecast of 3 to 3.5 percent. Growth will pick up slightly next year, to 3 to 3.5 percent, the Fed said.

The minutes came from the Fed's Nov. 2-3 meeting, when it announced a plan to buy up $600 billion in bonds to drive down interest rates and support the economy. The prospect of lower rates had driven the dollar lower for months before the Fed's official statement.

In other trading, the British pound slid to $1.5781 from $1.5948, and the dollar slumped to 83.18 Japanese yen from 83.29 yen. Traders also consider the yen a safe-haven currency.

The dollar also leapt against currencies linked to countries that are big commodity exporters such as the Australian and Canadian dollars. Currencies of countries that are heavy producers of commodities such as oil, coal and iron ore tend to rise alongside worldwide stock prices, as a more robust global economy would increase demand for those basic materials.

The dollar rose to 1.0240 Canadian dollars from 1.0187 Canadian dollars, and gained to 0.9966 Swiss francs from 0.9906 Swiss francs.

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