Dollar slumps on Lehman woes, fresh credit squeeze jitters
Tuesday, 16 September 2008
SINGAPORE, Sept 15 (AFP): The dollar slumped in Asian trading today, pressured by growing worries about the state of the US financial system as investment bank Lehman Brothers appeared set to collapse, dealers said.
Moves by the US Federal Reserve and a consortium of banks to open up fresh credit on Sunday appeared to have done little to calm investors' nerves, they said.
The dollar traded at 105.54 yen, down from 107.92 yen in late Friday trading, while the euro changed hands at 1.4421 dollars, up from 1.4229. Markets in Japan were closed for a public holiday and will reopen Tuesday.
John Horner, a forex strategist at Deutsche Bank, told Dow Jones Newswires the dollar was likely to remain under pressure overall as long as Lehman Brothers' survival was in doubt.
Lehman Brothers appeared to be on the verge of liquidation when no buyer emerged for the firm, which has been scarred by the subprime mortgage meltdown, and some fear a domino effect that could ravage the global financial system.
US media reported Merrill Lynch, another storied Wall Street firm, had struck a deal to sell itself to Bank of America, and American International Group, one of the world's biggest insurers, was seeking emergency credit from the Federal Reserve.
Meanwhile, the Federal Reserve announced plans to make it easier to obtain fresh credit as markets braced for the collapse of Lehman Brothers.
The Fed said it was easing collateral requirements for the firms as it acted "to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution."
In a related action, a consortium of 10 global commercial and investment banks said it would provide 70 billion dollars to help offset a credit squeeze.
Moves by the US Federal Reserve and a consortium of banks to open up fresh credit on Sunday appeared to have done little to calm investors' nerves, they said.
The dollar traded at 105.54 yen, down from 107.92 yen in late Friday trading, while the euro changed hands at 1.4421 dollars, up from 1.4229. Markets in Japan were closed for a public holiday and will reopen Tuesday.
John Horner, a forex strategist at Deutsche Bank, told Dow Jones Newswires the dollar was likely to remain under pressure overall as long as Lehman Brothers' survival was in doubt.
Lehman Brothers appeared to be on the verge of liquidation when no buyer emerged for the firm, which has been scarred by the subprime mortgage meltdown, and some fear a domino effect that could ravage the global financial system.
US media reported Merrill Lynch, another storied Wall Street firm, had struck a deal to sell itself to Bank of America, and American International Group, one of the world's biggest insurers, was seeking emergency credit from the Federal Reserve.
Meanwhile, the Federal Reserve announced plans to make it easier to obtain fresh credit as markets braced for the collapse of Lehman Brothers.
The Fed said it was easing collateral requirements for the firms as it acted "to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution."
In a related action, a consortium of 10 global commercial and investment banks said it would provide 70 billion dollars to help offset a credit squeeze.