The dollar has fallen to a record low against the euro as traders bet that further interest rate cuts will be needed to stem a US recession.

The euro rose to $1.509 after buying $1.50 on Tuesday for the first time. Pound Sterling climbed against the greenback too, reaching almost $2.

Meanwhile, the US economy, a $15 trillion giant which makes up 25% of the world economy, is in trouble, and could drag down world growth. The US central bank has cut interest rates aggressively and the US Congress is planning an economic stimulus package to prevent a recession.

In the past few years the US economy has been growing strongly. But recent troubles in the housing and credit markets have hit the economy hard, with growth slowing sharply at the end of 2007. Economic forecasts suggest that the US growth in 2008 could be cut by half to about 1.5%.