The Associated Press Monday, March 17, 2008; 1:53 AM
TOKYO -- The dollar fell to a record low against the euro and to its lowest level in 12 1/2 years against the yen Monday as investors reacted nervously to news that JP Morgan Chase is buying rival investment bank Bear Stearns.
The move, aimed at averting a bankruptcy, sparked renewed worries among traders about the full extent of the credit crisis, sending Asian stock markets tumbling.
The U.S. currency also was hit by word that the Federal Reserve on Sunday cut its discount rate, or its lending rate to financial institutions, by a quarter point to 3.25 percent.
The dollar fell as low as 95.72 yen, its lowest point since August 1995, in morning trading in Tokyo before recovering to 96.76 yen in afternoon trading. The dollar finished in New York trading on Friday at 99.17 yen. It broke below 100 yen just last Thursday.
The euro rose to a record against the dollar, climbing as high as $1.5903.
Japanese officials quickly called for calm in the currency markets, but did not announce any plans for intervention to shore up the greenback by buying up dollars.
"Excessive fluctuation is never favorable for the Japanese and world economy," Chief Cabinet Secretary Nobutaka Machimura said. "We are concerned about the current situation with currencies fluctuating too much."
The weak dollar hurts the country's key exporters by eroding their overseas earnings when repatriated to Japan.
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