The dollar sank to a record low against the euro as U.S. home prices and consumer confidence tumbled, bolstering bets the Federal Reserve will keep reducing interest rates.

The U.S. currency declined to the weakest level since the euro began trading in 1999, and slumped against all of the most- active currencies as Fed Vice Chairman Donald Kohn said turmoil in credit markets and the possibility of slower economic growth pose a “greater threat” than inflation.

The dollar weakened to $1.4968 per euro at 4:02 p.m. in New York, from $1.4830 yesterday, falling past the previous historic low of $1.4967, set Nov. 23. The U.S. currency dropped to 107.27 yen from 108.07.

The U.S. currency has lost about a quarter of its value in the past five years, according to the Fed’s U.S. Trade Weighted Major Currency Dollar index, which comprises seven currencies of U.S. trading partners. The weaker dollar has made U.S. goods cheaper abroad, boosting exports to a record and shrinking the nation’s trade deficit last year for the first time since 2001.

Bloomberg News