The pound dropped to a record low versus the euro after the Bank of England cut its main interest rate to the lowest level since 1951. The euro fell earlier versus the dollar as European Central Bank President Jean-Claude Trichet delivered the biggest interest-rate cut in the bank’s 10-year history.
The dollar dropped 0.6 percent to $1.2793 per euro at 2:30 p.m. in New York, from $1.2717 yesterday. It touched $1.2550, the strongest since Nov. 21. The dollar fell 0.7 percent to 92.61 yen from 93.30 after touching 92.44, the lowest since Oct. 27. The euro traded at 118.48 yen, compared with 118.64.
Sterling fell as much as 1.1 percent to 86.96 pence per euro, the weakest level since the 15-nation currency’s 1999 debut, after the Bank of England lowered its target lending rate by a full percentage point to 2 percent. The pound slid 0.2 percent to $1.4750.
The ECB lowered its main refinancing rate by 0.75 percentage point to 2.5 percent. Trichet declined to give clues on further moves, saying only that the ECB shouldn’t get trapped” by cutting rates too low.
Sweden’s krona fell as much as 2 percent to 10.6229 against the euro, near a record low, as the Riksbank cut the benchmark rate by the most in 16 years to revive the ailing economy. Policy makers reduced the repo rate today by 1.75 percentage points to 2 percent, compared with the median forecast of a one- percentage-point reduction.
The yuan traded at 6.8837 per dollar, near a five-month low, on speculation U.S. Treasury Secretary Henry Paulson’s calls for a stronger yuan during a Beijing visit this week won’t stop China from weakening its currency to support exporters.