Fed decision sends greenback lower

Story link: Fed decision sends greenback lower

The US dollar added 0.2 percent to ¥117.50 against the yen after declines on Tuesday that were caused mainly by strengthen in the yen on reports that China would not continue to accumulate currency reserves. Analysts downplayed those reports, saying that they likely simply meant that Beijing was creating an investment management agency.

Otherwise the greenback was hurt by the decision of the US Federal Reserve to keep interest rates at 5.25 percent for at least another month. While the decision was expected by the vast majority of analysts, the statement that came with the announcement did not include any language indicating that rate declines are coming anytime soon.

The US currency dropped 0.1 percent to $1.2100 versus the Swiss franc, while it fell 0.3 percent against sterling, to $1.9670 and was 0.4 percent lower to $1.3370 in relation to the euro.

Meanwhile, besides its loss to the dollar, the yen was down 0.4 percent versus both the euro and sterling, to ¥156.75 and ¥230.80 respectively. The declines were blamed on strong sessions for the Asian equities markets, which tended to lower the risk aversion which had been driving the yen’s advances.

Sterling weakened on after the minutes of the most recent meeting of the Bank of England’s Monetary Policy committee were released. The record of the meeting showed that only one member of the committee voted to cut interest rates. Analysts had widely expected that two members would do so. The rest of the committee members voted to leave interest rates at 5.25 percent. With the release of the report, the UK currency dropped 0.2 percent to £0.6801 versus the euro.