Dollar Shock: Today U.S. Dollar Falls Record Amount Against Euro
Today the U.S. dollar fell against the euro by the most since the currency was introduced in 1999 on fears the massive U.S. central bank intervention and record deficits will create an inflationary environment. The dollar was also weak against other major currencies, including the Yen - hitting a 13 year low against the Japanese currency.
Yesterday, in an unprecedented move, the U.S. Federal Reserve established a target range for the federal funds rate of 0 to 1/4 percent. In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In addition, as previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.
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