Dollar Whip Sawed Back Down; Record Low
March 12th, 2008Via: Bloomberg:
The dollar fell to an all-time low against the euro on concern that the Federal Reserve’s plan to provide funds to banks won’t be enough to break the gridlock in money-market lending and stem credit losses.
An index tracking the dollar against six major currencies fell close to a record low as traders bet the Fed will cut rates by as much as three quarters of a percentage point next week to avert a recession, while the European Central Bank keeps borrowing costs unchanged. The yen advanced against the dollar and the South African rand after a government report showed Japan’s economy grew faster than forecast in the fourth quarter.
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Policy makers in the U.S., U.K., Canada, Switzerland and the euro region agreed yesterday on a second round of emergency- loans to curb rising money-market rates. The Fed said it will lend as much as $200 billion of Treasuries through a new lending tool and widen the collateral it accepts to include mortgage- backed securities.
Related: The U.S. Dollar’s Post-Fed Action Rally Lasted About as Long as Cheap Lipstick on a Prom Date
