Dollar slumps as Obama returns for fiscal cliff talks

<p>The dollar has slumped in forex markets as Barack Obama returns to continue fiscal cliff talks.</p>

Barack Obama has curtailed his Christmas break with his family in Hawaii to continue ongoing fiscal cliff talks with House speaker John Boehner.

If the president and his Republican counterpart fail to reach an agreement on cushioning the blow of the imminent parcel of spending cuts and tax hikes due to come into force on January 1st, it could undo much of the US recovery and plunge the nation back into recession.

Both the White House and Republican Party have been locked in an impasse over the matter since the election in November and this week the US Treasury waded into the discussions.

In an open letter to the Democrat US Senate majority leader Harry Reid, Treasury secretary Timothy Geithner stated the Treasury would enact extraordinary accounting measures to prevent the government from hitting its debt ceiling.

At 11:20 GMT today (December 27th), the dollar fell by 0.6 per cent in trading with the euro to $1 buying €0.753, while it depreciated by 0.4 per cent against the pound to £0.617.

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