The dollar rose against the euro and yen on Tuesday after the Federal Reserve announced it would boost lending to credit-hungry U.S. financial institutions in a bid to avert a recession.

The Federal Reserve said it would lend primary dealers up to $200 million in Treasury securities in exchange for collateral related to mortgage loans. The dollar jumped quickly after the announcement.

The dollar rose as high as 103.54 yen. It was trading at 103.42 yen at 5:25 p.m. in New York.

Expectations of a rate cut diminished after the Fed's move to increase liquidity.

Meanwhile, the European Central Bank' governing board member Axel Weber indicated that the ECB had no more room for rate cuts.