Dollar falls amid terrorist attacks

By Geraldine Ryerson-Cruz and Mark Tannenbaum
Bloomberg News

NEW YORK — The dollar fell against the euro after planes crashed into the twin towers of the World Trade Center in New York City and into the Pentagon, in what President George W. Bush called "an apparent terrorist attack."

"All points of U.S. strength are being hit by terrorism and that makes the U.S. dollar vulnerable," said Jeremy Fand, head of global foreign exchange strategy at UBS Warburg in Stamford, Conn.

The dollar fell to a one-week low against the euro to 90.41 U.S. cents from 89.80 yesterday. The dollar erased gains against the yen, falling to 120.02 yen from 121.83 before the crashes and from 121.04 yesterday.

Trading in the $1.1 trillion per day foreign-exchange market slowed to a near halt as many exchanges and banks were evacuated or closed for business after the crashes.

"Clearly volumes are way down. We're not doing much interbank trading," said Dan Almeida, head of currency trading at Deutsche Bank in midtown New York City. The bank handles 9.1 percent of the world's currency transactions, the second-largest share behind Citibank.

Interbank trading accounts for about 60 percent of daily currency turnover. "We are open for business to the extent business is open," said Almeida.

Blasts rocked the New York buildings just after 9 a.m. New York time, and both towers collapsed by 10.28 a.m.

The towers, the White House and U.S. Capitol buildings, and FBI headquarters are all being evacuated. Evacuations are also underway at the New York Stock Exchange, the New York Mercantile Exchange and many banks.

"We're evacuating the building," said Vincent Palazzolo, chief trader at Sumitomo Mitsui Banking Corp. offices in midtown Manhattan.

Brown Brothers Harriman & Co., across the street from the NYSE, called clients to ask them to stop requesting trades. Banc One Capital Markets in Chicago is evacuating its offices, said Heather Boyer at the bank's foreign exchange sales desk in Chicago.

"It looks as though U.S markets will be closed," said Nick Parsons, global head of currency research at Commerzbank AG in London. "At first everyone was calm, then when the theory changed to it being terrorism, the dollar seemed to move lower."