Dollar Slides On Lehman News

The dollar dropped against the euro and the pound after Lehman Brothers Holdings Inc. filed for bankruptcy and traders speculated the Federal Reserve may need to cut interest rates to buoy financial markets.

The pound rose above $1.80 to $1.8127 before paring gains as Bank of America Corp. agreed to acquire Merrill Lynch & Co. and as investors sought the relative safety of U.S. Treasuries.

At 10.15am London time the pound was $$1.7986.

Against the euro the dollar declined to $1.4481, the lowest since Sept. 4, before trading at $1.4253 per euro at 10:10 a.m. in London, from $1.4224 in New York late last week. It touched $1.3882 on Thursday, the strongest since Sept. 2007.