The dollar took a pummeling and equity markets in Europe and Asia slumped as worried investors reacted to the Bear Stearns fire sale and the Fed's emergency rate cut. The dollar dropped to a shocking 95 yen, hit an all-time low of $1.59 against the euro, and remained below one Swiss franc. The US currency is "facing a credibility crisis," one Asian investor told Bloomberg, while another said that "the Fed is throwing the dollar out of the window."
After a bad day in Asia—the Hang Seng plunged 5.2% and the Nikkei 3.7%, leading declines across the continent—it was Europe's turn to reel. By late morning the DAX in Frankfurt was down 3.1%, with the FTSE and the CAC 40 following close behind. Investors were unimpressed by the Fed's facilitation of JPMorgan's $2-a-share buyout of Bear Stearns, which only stoked fears that more companies are in trouble.