The dollar dropped after the Federal Reserve on Wednesday cut interest rates by half a percentage point, citing greater confidence that inflation will continue to recede to the U.S. central bank's 2% annual target.

The effect of a declining dollar is likely to be subdued, said economist Eswar Prasad, since other nations are seeing weak economic growth.

The U.S. dollar has been sliding in the run-up to a widely expected interest-rate cut from the Federal Reserve on Wednesday and, depending on the size of the Fed’s move, it could end up weakening further — or it may be a buying opportunity.