Dollar dives to new low against euro after Fed rate cut

NEW YORK, Oct 31, 2007 (AFP) – The dollar slid to new lows against the euro and the pound Wednesday after the US Federal Reserve cut a quarter-point from interest rates.

The single European currency topped the 1.45 dollar level for the first time, reaching 1.4504 dollars after the Fed’s widely anticipated short-term rate cut to 4.50 percent.

Around 2200 GMT, the euro was at 1.4480 dollars, up from 1.4439 here late Tuesday.

The dollar edged up to 1.1583 yen from 1.577 but fell heavily against the pound. The British currency rose to 2.0809 dollars in late trade from 2.0676 Tuesday. Earlier it had climbed to a record 2.0811 dollars.

The Fed, as widely expected, lowered its base federal funds rate by a quarter of a percentage point to 4.50 percent.

In an accompanying statement to its second rate cut in as many months, the Federal Open Market Committee said that although financial market turmoil linked to a US housing downturn had eased in part, “the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction.

“Today’s action, combined with the policy action taken in September, sho

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