Delay in Bailout Package Decision Causes Dollar to Drop

The U.S. Dollar hit a 2-month low versus the Euro and a group of currencies today, as investors moved out of the U.S. Dollar due to uncertainty surrounding the future of the ailing U.S. car makers and the negative impact it would have on the economy should they fail.

Following the collapse of the bailout plan in the U.S. Senate to avert bankruptcy by the auto makers, the White House said there is a chance that they will tap part of the $700 billion bailout fund approved for the financial industry to rescue the ailing U.S. auto makers.

Investors are concerned that the failure of even one of the big three auto makers would exacerbate the recession, which has been going on for almost a year now and eventually push other companies over the edge.

On December 15, 2008 by 09:19 GMT, the Euro rose by 0.7% against the U.S. Dollar and traded at $1.3470, after rising to $1.3500, the highest trading price in more than 2 months, in earlier trading during the day.  The U.S. Dollar also dropped to a 2-month low versus a basket of currencies and traded at 82.994 .DXY.

The Federal Reserve Bank will be holding a 2-day policy-setting meeting starting today as the U.S. Dollar remains under pressure.