The dollar hit a fresh two-year high against the euro today as falling share prices in Asia and Europe prompted investors to seek safety in the US currency.
The euro was down 3 per cent at $1.2595. Sterling lost 4.5 per cent to $1.5580.
Oil prices fell below $64 a barrel today, to new 16-month lows on gloom about a global economic downturn and despite an OPEC agreement to cut output.
Oil cartel OPEC said at its emergency production meeting today it would cut crude output by 1.5 million barrels per day from September production levels, effective from November 1st.
The group had been expected to cut by up to 2 million barrels per day to safeguard prices after recent falls.
"Crude oil has been heading lower again since the start of trading in Asia on fears that the cut might not be sufficient to compensate (for) the shortfall of demand due to a global recession," Dresdner Bank said in a research note.