Dollar Trades Near Lowest in More Than Two Months After Fed Cut

Dec. 17 (Bloomberg) -- The dollar traded near the lowest level in more than two months versus the euro after the Federal Reserve cut the target rate to a range of zero to 0.25 percent, making the greenback the lowest-yielding currency among industrialized nations.

The U.S. dollar posted its biggest five-day drop against the euro since the 15-nation currency’s 1999 debut as the central bank said in its statement it will do whatever’s needed to ease the recession. European Central Bank President Jean- Claude Trichet signaled on Dec. 15 it may pause in reducing borrowing costs at its meeting in January.

“Sell dollars,” said Scott Ainsbury, a portfolio manager who helps manage $14.6 billion in currencies at New York-based hedge fund FX Concepts Inc. “We have a zero interest-rate policy. It didn’t do very well for Japan over the years, did it?”

The dollar traded at $1.4038 per euro at 7:13 a.m. in Tokyo, after dropping 2.2 percent yesterday and reaching $1.4147, the weakest level since Oct. 1. The dollar was quoted at 88.86 yen following a 1.8 percent decline. It touched 88.53 on Dec. 12, the lowest level since August 1995. The euro traded at 124.81 after increasing 0.5 percent.