Dollar Falls to Record Low Versus Euro on Quarter-Point Fed Cut

The dollar fell to a record low against the euro after the Federal Reserve cut its benchmark interest rate for the second straight month.

Central bank policy makers lowered their target rate for overnight loans between banks by a quarter-percentage point to 4.5 percent to keep the worst housing slump in 16 years from threatening growth. Rate cuts can dim demand for deposits in the currency.

The weak dollar trend remains, said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. If growth slows further, the Fed may still need to act to cut rates.

The dollar declined to $1.4489 per euro at 2:46 p.m. in New York from $1.44432 late yesterday, and touched $1.4495, the weakest since the European currency's debut in January 1999. The U.S. currency traded at 115.33 yen from 114.63.

The U.S. Dollar Index traded on ICE Futures U.S. in New York touched 76.498 today, the lowest since the index began in 1973. The index is headed for its fifth drop in six years.