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WASHINGTON: The dollar fell again Thursday against the euro and the yen as the US government shutdown ground through its third day with no end in sight.
Worries mounted that the political paralysis in Washington would lead to the government being forced to default on its obligations.
With it appearing that the issue of raising the country's borrowing limit would be rolled into the fight over the budget, the Treasury warned that not raising the debt limit by October 17 would force it to default on its obligations.
That "could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth," the Treasury said
The euro rose to $1.3618 at 2100 GMT, compared with $1.3580 late Wednesday.
The dollar fell to 97.27 yen from 97.34 yen, while the euro rose to 132.49 yen from 132.21 yen.
The darkening mood in US dollar markets contrasted with a slightly brighter picture for the euro, analysts said.
"The euro now finds itself in the enviable position of having a central bank that is cautiously confident in its region's economic recovery -- something the British pound has enjoyed the past several months," said Christopher Vecchio, currency analyst at DailyFX.
That is "something the US dollar has not enjoyed, as evidenced by the Federal Reserve refusing to taper QE3 in September."
The British pound slipped back to $1.6155 from $1.6223, while the dollar slid to 0.8991 Swiss franc from 0.9026 franc.
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