Dollar falls after Federal Reserve comments

AP News
Posted: Nov 02, 2011 5:31 PM
Dollar falls after Federal Reserve comments

The dollar fell against other currencies after the Federal Reserve said it wouldn't make any changes to its low-interest rate policy. Fed Chairman Ben Bernanke left open the possibility of more action in the future to help boost the economy.

The Fed said that the economy has strengthened somewhat, but predicted that it will grow more slowly than previously expected. It said that unemployment will average 8.6 percent by the end of next year, higher than it previously expected. In June, the central bank predicted that unemployment would drop below 8 percent next year.

At his news conference, Bernanke said that economic growth will be "frustratingly slow." He added that the Fed is prepared to take any action needed to help the economy.

"These pessimistic forecasts leave the door open for more stimulus and Bernanke's comments confirm that the Federal Reserve has not given up on (a third round of quantitative easing)," said Kathy Lien, director of research at GFT.

Quantitative easing occurs when the Fed buys bonds and other debt securities to lower interest rates. That would likely weaken the dollar.

The euro rose to $1.3765 in late trading Wednesday from $1.3715 Tuesday. The British pound rose to $1.5967 from $1.5962.

The dollar fell to 78.06 Japanese yen from 78.33 yen, to 0.8832 Swiss franc from 0.8863 Swiss franc and to 1.0143 Canadian dollar from 1.0168 Canadian dollar.

The dollar was also lower against currencies in New Zealand, Hong Kong, Singapore and Latin America.