Dollar Falls Versus Euro on Joint Rate Cuts by Central Banks

The dollar declined the most against the euro in more than two weeks after global central banks made joint cuts in borrowing costs, reducing demand for the U.S. currency as a haven from credit market turmoil.

Foreign-exchange volatility implied by dollar-euro options rose to the highest since the 15-nation currency's 1999 debut on concern the financial crisis will deepen.

The dollar dropped 0.9 percent to $1.3706 per euro at 8:08 a.m. in New York, from $1.3588 yesterday. The U.S. currency fell 0.7 percent to 100.78 yen, from 101.47. The euro increased 0.2 percent to 138.08 yen, from 137.89.

The Federal Reserve reduced its target lending rate by a half-percentage point to 1.5 percent, the central bank in a statement. The European Central Bank and the central banks of the U.K., Canada, Sweden and Switzerland are also reducing rates, the Fed said. Separately, China's central bank lowered its key one-year lending rate., Bloomberg
10/8/2008 5:51:42 AM