The dollar fell after the Federal Reserve last night held off on raising interest rates. The US central bank declined to boost its short-term interest-rate target at a policy-setting meeting, opting to delay an increase amid stubbornly low inflation, an uncertain outlook for global growth and recent financial market turmoil.

The dollar pared gains as US stock markets erased advances after China cut interest rates following Monday’s global equity wipeout.

Stocks and the euro fell yesterday as investors worried about details of a €100bn deal to shore up Spain’s banks, prompting traders to cash in hefty gains triggered by the widely expected deal.

FOR a third day in a row the dollar fell to new record lows as continuing worries about recession in the US saw investors traded in the greenback for the euro and the Swiss Franc.