The euro may be falling on the foreign exchanges but it held onto its title as the favourite currency of fund managers around the world in March, according to the latest Merrill Lynch Gallup poll. The single currency, which hit record lows against the yen this week, was named by 58 per cent of funds in the survey as their favourite currency on a one-year view, up slightly from 57 per cent in February.

The dollar, which has also set record highs against the euro in the past month, came second in the survey of global fund managers, picking up 25 per cent of the vote as it did last month. The euro has fallen as much as 4 per cent against the dollar since the last survey, hitting a record low of $0.9390 on February 28th. It has shed more than 6 per cent against the yen during that time, falling to record lows again this week.

However, fund managers are keeping faith with the euro. They expect the pace of US and British economic expansion to slow but see growth picking up in Europe, the region where they expect the most monetary tightening to occur. The single currency overtook the dollar as the favourite currency of US fund managers.

Forty-seven per cent of them named the euro as their favourite currency compared to the 40 per cent who plumped for the dollar. In February's survey, the euro was the most favoured currency of 46 per cent of the US fund managers polled, while the dollar won 50 per cent of the votes.

It had been the first time since June 1999 that US funds had preferred the dollar to the euro. Eighty-three per cent of the continental European funds polled named the euro as their favourite currency, up slightly from 82 per cent in February.