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Dollar Plunges On Emergency Fed Rate Cut

(March 16, 2008) The U.S. dollar has seen its recent decline accelerated on Sunday ET evening after the U.S. Federal Reserve implemented an emergency rate immediate 25-basis point reduction in its benchmark credit rate, dropping the rate to 3.25 percent.

The board also approved an increase in the maximum maturity of primary credit loans from 90 days from 30 days. The Fed board also voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to securitized markets. The facility becomes available at the open of business on Monday.

The moves came after U.S. investment bank Bear Stearns was sold to JPMorgan on Sunday evening as a final alternative to bankruptcy on liquidity issues.

As a result, the greenback has plummeted to record lows against other world currencies. The euro has risen above 1.5800 on EBS for a new record high against the greenback. The Swiss franc also hit a new record high against the dollar, climbing to 0.9860. The dollar has fallen below Y97 on EBS for its lowest value since September 1995.

In addition, spot gold extended its record high by breaking $1,020 per ounce.

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