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The world dumped the dollar on Thursday, pushing it to an all-time low of $1.40 against the euro and to parity with the Canadian dollar for the first time in three decades as currency traders around the world digested the full implications of the Federal Reserve’s new course for interest rates.

The frenzied selling began early in the day in Europe, never let up, and reached across the Atlantic as traders concluded that the lower borrowing costs the Fed introduced Tuesday would dampen the appeal of dollar-denominated assets like stocks, bonds and real estate just as other central banks are raising rates to create the opposite effect.

With the Fed’s action layered atop a weakening American economy that is menaced as well by the prospect of a retreat by consumers who have driven growth for years, the dollar radiated instability. Its traditional role as a refuge in times of crisis, evident as recently as early August, appeared all but forgotten.

“It’s pretty ugly right now for the dollar,” said Jim McCormick, the London-based chief of currency strategy for Lehman Brothers International. “But the markets are having a very rational response to what the Fed did on Tuesday.”

The dollar dipped as low as $1.4094 in midday trading in New York, having cracked the $1.40 level in London, the world’s currency trading hub. The dollar also lost ground against the pound, with sterling now worth roughly $2.

The Japanese yen and the Swiss franc also rallied strongly against the dollar, a highly unusual development since interest rates are still comparatively low in both those countries. The yen registered its biggest daily drop against the Japanese yen in two weeks.

Against the Canadian dollar, currency of the largest U.S. trading partner, the dollar tumbled to one-to-one, a level not seen since the 1976, the early phase of a currency crisis that would eventually send shock waves through the world economy.

“It seems light years from five years ago when the dollar was threatening to drop below 60 cents,” said Douglas Porter, an economist with BMO Nesbitt Burns, the brokerage unit of the Bank of Montreal. “It will affect the psychology here in a big way.”

Gold prices also soared, reaching a 27-year high at $744.10 an ounce, up $14.60, in midday trading in New York.