$ drops to record 1.59 a euro, 12-yr-low to yen

The dollar plunged across the board today 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. The euro soared to another record high, climbing above $1.59, while the Japanese yen grew stronger against the dollar. The 15-nation euro rose as high as $1.5904 in European trading, topping its previous record of US$1.5687, set on Friday.

However, it quickly fell back, pushed by figures from the US Commerce Department showing that the country’s current-account deficit dropped by 9 per cent in 2007 to $738.6 billion, falling away from the previous year’s record high. The euro was back down to $1.5749, even as a report from the Federal Reserve underlined persistent gloom about the US economy – showing that industrial output fell by half a per cent in February.

The dollar also fell to a 12-year-low of 95.77 to the Japanese yen before recovering to 97.13, still below the 99.21 yen it bought Friday in New York. “It has certainly been something of a historic weekend, with an emergency Fed rate cut and news that JPMorgan intends to acquire Bear Stearns marking the next chapter in the credit crisis,” said James Hughes, of CMC Markets in London. “Unsurprisingly, this has been broadly bad news for the dollar.” The pound fell to $2.0074 from $2.0218 .