Bank Collapses, Dollar Plummets

Over the weekend, Bear Stearns, a prestigious American investment bank,
hurriedly scrambled to find a buyer in order to avoid having to file
for bankruptcy. While a buyer (JP Morgan) was ultimately secured,
investors remained jittery, as the collapse of this magnitude is virtually unprecedented.  When forex markets
re-opened on Monday, the Dollar crashed against all of the world's
major currencies, namely the Euro and the Yen. Furthermore, analysts
are now beginning to view forex intervention as increasingly likely. It's
still unclear whether the Bank of Japan or the European Central Bank
(with or without support from the Fed) would spearhead any
such intervention.  At the breakneck speed at which events are unfolding,
however, no one will be surprised if a plan is quickly cobbled together. The Wall
Street Journal reports:

"Were such intervention to be seen, (the euro) could briefly trade down
to $1.55, yet unless the (ECB) is prepared to back up such intervention
with a rate cut, intervention will be futile," said [one analyst].

Read More: Dollar's Slide Keeps Pace