Mervyn King, the governor of the Bank of England, could not have been clearer last week on forecasting movements in global exchange rates. "I have no idea where exchange rates will go in the future and I have no intention of ever starting to forecast exchange rates. That's a mug's game," Mr King said. Since the US election, however, investors in currency markets have adopted a different view. The dollar, they think, is moving in one direction only: down.

The US currency came under renewed selling pressure the moment it became clear that George W. Bush had been re-elected president. In the two and a half weeks since then, the value of the dollar has fallen 2.5 per cent against the euro and 1.9 per cent against the yen. The falls represent an acceleration of the dollar's steady decline since 2002. Since the start of that year, the greenback has fallen 32 per cent against the euro and 21 per cent against the yen. Against major currencies, the dollar has now fallen to levels last seen in 1995.