The dollar fell against most major currencies on Tuesday after U.S. government announced a new plan to support consumer lending.
The U.S. Federal Reserve and the Treasury Department said on Tuesday that they would provide about 800 billion U.S. dollars to help unfreeze the market for consumer debt from home mortgages to credit cards.
In an attempt to increase the availability of home loans, the Federal Reserve said it will buy up to 100 billion dollars in direct obligations from mortgage giants Fannie Mae and Freddie Macas well as the Federal Home Loan Banks. The central bank also will buy 500 billion dollars in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.
The Fed will lend up to 200 billion dollars to the holders of securities backed by various types of consumer loans. As part of the 700 billion dollars bailout package released in October, the Treasury Department will provide 20 billion dollars of credit protection to the consumer debt program.
U.S. Treasury Secretary Henry Paulson said on Tuesday that lack of affordable consumer credit undermines consumer spending and as a result weakens the economy. "Nothing is more important to getting through this housing correction than the availability of mortgage finance," he said.
The euro bought 1.3022 dollars in late New York trading compared with 1.2877 dollars it bought late Friday. The pound rose to 1.5440 dollars from 1.5115 dollars.
The dollar fell to 1.1878 Swiss francs from 1.1988 Swiss francs, and fell to 95.65 Japanese yen from 96.85 Japanese yen. It fell to1.2282 Canadian dollars from 1.2377 Canadian dollars.
Source:Xinhua
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