Germany's central bank today lowered a key lending rate in an unexpected move likely to help the dollar recover from its recent postwar lows against the German mark and the Japanese yen.
The Bundesbank lowered its discount rate, its interest charge on loans to banks, to 4 percent from 4.5 percent.
It was the bank's first change in a key lending rate since last May.
The rate cut should help the dollar by making the German mark less attractive to foreign investors. The dollar has traded near postwar lows in recent weeks against the German mark and the Japanese yen.
The dollar rose by 2.5 pfennigs against the mark and the German stock market rose immediately after the move. The Swiss National Bank also cut its discount rate.