Dollar Extends Losses Following the Fed Rate Cut (AP) (23-01-2008)

NEW YORK (AP) -- The dollar fell back against most major currencies after the U.S. Federal Reserve announced the emergency interest rate Tuesday and stocks plunged across the globe.

The 15-nation euro, which had traded as low as $1.4366 earlier in the session, jumped to $1.4612 in late New York trading, a significant weakening by the dollar against the euro from Monday's European price of $1.4439, on Martin Luther King Day.

The British pound rose to $1.9625, above $1.9452 on Monday in Europe and the $1.9559 it was worth Friday in New York. The dollar rose to 106.48 Japanese yen from 105.92 yen on Monday, but it was down from 106.67 yen late in New York on Friday.

Before Tuesday's Fed move, the euro had been losing ground on speculation the European Central Bank will refrain from further rate hikes, viewed as possible amid the threat of rising Euro-zone inflation.

Within an hour of the Fed's announcement, the Bank of Canada announced it was lowering its overnight interest rate by 25 basis points to 4 percent, a widely expected move.

It was the bank's second consecutive cut amid fears over the impact of a U.S. recession. The U.S. is Canada's main trading partner. More cuts are likely, said the bank in a statement.

The dollar also slipped to 1.0974 Swiss francs from 1.0990 Swiss francs in late New York trading last week.

Source: AP