The dollar fell to a twelve year low against the yen and recovered from a new low against the euro on Monday after the Federal Reserve's to cut its discount lending rate and JPMorgan's bargain buy of imperiled investment bank Bear Stearns Cos.

The Federal Reserve made two moves in an effort to boost market liquidity and promote orderly market functioning.

The Fed, in anticipation of today's market opening, cut the rate it charges banks for direct loans by a quarter percentage point to 3.25 percent. The Fed also said it would begin to allow securities firms – or primary dealers – to borrow from the bank, extending lending terms which have been traditionally been reserved to banks.

The dollar reached an overnight all-time low of $1.5905 per euro. The dollar also reached a 13 year low versus the yen at 95.76 yen. However it made a slight recovery. The dollar was trading at $1.5757 per euro at 12:40 p.m. in New York from $1.5674 on Friday. It also traded at 96.87 yen from 99.09.