Dollar hits new low against euro

London: The US dollar plunged to a new record low against the euro and stayed at a 12-year low against the yen in early Asian trading on Monday amid deepening worries over the US economy, traders said.

The dollar plunged across the board even as new liquidity-boosting measures launched by the Federal Reserve over the weekend failed to assuage worries about the health of the US banking sector.

Stricken Bear Stearns is being snapped up by rival JP Morgan Chase for just $2 a share - versus Friday's closing price above $30 - in a sign that even heavyweights of the financial sector can be brought down by the US subprime mortgage market woes and the resulting credit crunch which took hold last summer.

The Federal Reserve took more emergency measures to stem the fast-spreading financial crisis, cutting its discount rate on Sunday and opening up discount window lending to major investment banks, a tool not used since the Great Depression.

But the moves did not stop the dollar from sliding as much as 3 percent in early Monday trading to below 96 yen, its lowest since 1995 and bringing year-to-date losses to 13 percent.

The euro hit 1.5737-40 dollars in early trading shortly after 7:00 am (2200 GMT), the highest level since it was created in 1999, before easing to 1.5687 dollars later.

The dollar also fell to 98.02 yen in early trading, down from 99.18 yen in New York. It was trading at 99.01 yen in Tokyo Monday morning.

The dollar fell as worries over the US economy have deepened, said Kenichi Yumoto, vice president at the foreign exchange sales and trading department of Societe Generale in Tokyo.

"It's all about Bear Stearns," he said, referring to news Friday of an emergency loan to prop up the crisis-hit Wall Street investment bank.

The fact that US regulators intervened to drag the bank from the brink of collapse highlighted worries over the health of US financial companies, he said.

But Yumoto said the dollar's renewed plunge may come to a halt in Asia after a new round of selling runs its course.