Alarm bells send dollar falling

The dollar plummeted on Tuesday after an emergency cut in the US federal funds rate set alarm bells ringing over the health of the country’s economy.

The dollar – which traded strongly on Monday as US investors repatriated funds in the face of the sell-off in global equities – sold off aggressively.

By midday in New York, the dollar was down 1.3 per cent to $1.4630 against the euro, had lost 1 per cent to SFr1.0980 against the Swiss franc and dropped 0.9 per cent to $1.9610 against the pound.

Analysts said the dollar could fall more, given that the Fed’s 75bp cut risked being seen as a panic move.

They said this implied that the central bank could be in possession of specific information which had increased its concerns over the health of the US financial sector.

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