Dollar sinks against Euro, Yen
In European trading, the euro rose as high as $1.5904 but it soon fell back to $1.5769. That was still more than the $1.5687 it bought late Friday in New York.
The dollar fell as low as 95.72 Japanese yen, its lowest since August 1995, before it recovering to 97.08 yen but still below the 99.21 yen it bought in New York on Friday. The dollar broke below 100 yen just last Thursday.
The lows came a day after the Fed approved a cut in its emergency lending rate to financial institutions to 3.25 percent from 3.5 percent.
Also on Sunday, JP Morgan & Co. said it would acquire Bear Stearns for $236.2 million in a deal backed by the Fed. JP Morgan will pay $2 per share, though Bear Stearns closed at $30 per share Friday.
"It has certainly been something of an historic weekend, with an emergency Fed rate cut and news that J.P. Morgan intends to acquire Bear Stearns marking the next chapter in the credit crisis," said James Hughes of CMC Markets in London.
"Unsurprisingly this has been broadly bad news for the dollar with (the) euro-dollar managing a short-lived breach above 1.59 -- yet another all-time record high -- although this has been short lived with profit takers stepping in," Hughes said.
The Fed is scheduled to meet Tuesday and analysts are predicting that the central bank could reduce the benchmark rate for short-term loans between banks by as much as another percent.
That is compared to the European Central Bank which has left its own rate at 4 percent as inflation in the 15-nation euro zone hit yet another record high last month.
The Bank of England said Monday it will offer an extra 5 billion pounds -- around $10.1 billion -- of reserves into the short-term money market on Monday because of conditions in the market.
The dollar rose against the British pound, which fell to $2.0096 from $2.0218 on Friday.
Lower interest rates can jump-start a nation's economy, but can also weigh on its currency as traders transfer funds to countries where they can earn higher returns.
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