Dollar Declines to 13-Year Low Against Yen After Fed Rate Cut

[Enivid]

The dollar fell to a 13-year low against the yen and the weakest versus the euro in 11 weeks after the Federal Reserve cut its target interest rate to the lowest among the world’s industrialized nations.

The U.S. currency also declined after the central bank said it will expand purchases of debt securities to fight the recession. The yen remained higher after Japan’s finance minister said he is ready to take steps in the currency market. The British pound was near the weakest on record against the euro before the Bank of England releases minutes from its Dec. 4 meeting, when policy makers cut borrowing costs to the lowest level since 1951.

The dollar fell to 88.24 yen, the lowest since August 1995, before trading at 88.67 yen as of 7:48 a.m. in London from 89.05 yen late yesterday in New York. Against the euro, the dollar declined to $1.4051 from $1.4002 yesterday, after touching $1.4192, the weakest level since Sept. 30. The euro was at 124.57 yen from 124.71 yen.

“Last week we sold the dollar against the euro and the Australian dollar, and we may add to these positions,” said Akira Takei, general manager for international bonds who helps oversee the equivalent of $2.46 billion at Mizuho Asset Management in Tokyo. “The Fed’s alternatives are diminishing. Among investors, there will be less confidence in the dollar.”

The dollar may fall to $1.45 per euro by March 31, he said.

The Australian dollar rose to a two-month high of 70.25 U.S. cents before trading at 69.65 cents from 69.43 cents yesterday. The pound traded at 90.03 pence per euro from 89.94 pence yesterday, when it reached an all-time low of 90.50 pence. Sterling rose to $1.5610 from $1.5581.

From Bloomberg News.

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