The UsdJpy fell below 99 and EurUsd hit a record high after Bear Stearns said a worsening cash position forced the Wall Street firm to secure emergency financing. News that the New York Federal Reserve and JP Morgan Chase were to provide funds for the fifth-largest US investment bank signaled more credit turmoil to come and added to investor fears that the economy is in for a long recession.
UsdJpy dropped -1.66% to 99.08. It was down nearly 11% so far in 2008.
EurUsd hit 1.5688 on Friday, all-time high, before easing to 1.5680 up 0.38%. UsdChf fell below parity for the first time ever, trading at 0.9973 before easing to 0.9979 -1.23%.
Analysts said the dollar is likely to remain on the ropes because the Fed may have to do much more to ease market nerves, either by cutting interest rates even more aggressively or by taking additional measures to inject liquidity. In addition to providing funds to Bear Stearns, the Fed last week announced plans to lend $200 bio to primary dealers and accept various mortgage debt as collateral.
US economic data on Friday did no favors for the Dollar. The University of Michigan consumer sentiment index fell to a fresh multi-year low. A separate report showed underlying inflation unchanged in February.