Dollar Slumps Below 96 Yen

The dollar fell below 96 yen for the first time in 12 years after the Federal Reserve's emergency weekend cut in its discount interest rate and the sale of Bear Stearns Cos. to JPMorgan Chase & Co., Bloomberg 3/17/2008 6:33:31 AM

The dollar dropped to a record low against the euro and the Swiss franc as the Fed made its first weekend change in borrowing costs since 1979 and Bear Stearns was acquired for less than a 10th of its March 14 value. Traders increased bets the Fed will slash its benchmark target rate by 1 percentage point tomorrow to stem a slump in confidence in financial markets.

The dollar fell to as low as 95.76 yen, the weakest since Aug. 15, 1995, before trading at 97.16 yen at 8:32 a.m. in London from 99.09 yen late in New York on March 14. Against the euro, the dollar dropped to $1.5903, the weakest since the creation of the single European currency in 1999. It slid to a record 0.9638 Swiss francs. The dollar may drop to 95 yen this week, Fukaya said.

The currency set record lows against the euro for five consecutive days as investor confidence tumbled, sending U.S. stocks lower for a third straight week. The MSCI Asia-Pacific index of regional shares fell 2.4 percent, its third day of declines. Gold and crude oil rose to a record.

The U.S. currency has lost about 16 percent against the euro and 17 percent versus the yen in the past year as the worst housing slump since 1991 forced the Fed to cut its benchmark rate 2.25 percentage points. The Fed lowered the rate it charges commercial banks for loans by a quarter percentage point to 3.25 percent in early Asian trade.

Dollar Slumps Below 96 Yen