Dollar hits 13-year low against yen

New York: The US dollar tumbled yesterday, hitting its lowest in more than 13 years versus the yen and also falling against the euro, a day after the Federal Reserve slashed interest rates to the lowest among major economies.

The dollar's plunge against the yen was stoking speculation that Japanese authorities may intervene to rein in the yen's climb, which is hurting the nation's exporters.

The Fed on Tuesday cut its federal funds rate target to a record low, setting a range of zero to 0.25 per cent compared with the previous level of 1 per cent, and said it would use "all available tools" to battle recession.

"The fact that the Fed made this major policy move yesterday really changed the balance of power towards the euro for the time being," said Boris Schlossberg, director of currency research at GFT Forex in New York. The cut further diminished the greenback's yield appeal against the euro, which has registered a 11 per cent gain so far during the month.

"The dollar effectively could be the new carry trade [currency], although in an environment where virtually everybody is converging towards zero interest rates, the carry trade is now holding much less power than it used to."