The Federal Reserve made a long-expected cut to the US interest rate yesterday, although some observers have been surprised at how much the rate was lowered by.

A drop of half a percentage point sees the US base rate fall to 4.75 per cent from 5.25 per cent.

Currency traders have stepped away from the dollar following the move, according to figures supplied by Reuters.

The dollar stayed near a record low of 1.3989 against the euro, levelling out at 1.3980, while the yen climbed to 115.80.

Commentators interviewed by CNN News were of differing opinions about the dollar's fortunes in the near-term following the rate cut.

Market analyst Omer Esiner told the news network the move is "dollar negative" and expects the dollar "to continue to grind lower to the end of the year".

David Jones, chief market analyst at CMC Markets, agreed in part, but feels that the dollar will only go into a protracted slide if the cut is one of a series as opposed to a one-off.