Dollar recovers after rate move

The dollar hit a record low against the euro on Monday

The US dollar has recovered from recent lows against the euro and yen after the Federal Reserve cut interest rates by a smaller margin than expected.

Lower interest rates typically make the dollar and dollar-denominated assets less attractive to investors.

The dollar saw its biggest one-day rise against the Japanese currency since 1999 to trade at 99.55 yen.

The euro fell to $1.5635, down from Monday's record peak of $1.5904 hit after the meltdown of Bear Stearns.

The fire sale of Bear Stearns over the weekend raised fears that the credit crunch is getting worse and damaging the US economy.

The Federal Reserve cut US interest rates to 2.25% from 3% in an attempt to restore confidence to nervous financial markets and boost the ailing economy.

Markets had been betting the Fed would cut rates by a whole percentage point.