Dollar
slammed after Fed says it could do more By TALI ARBEL, AP
Business Writer | Tue Sep 21, 4:53 pm ET
NEW YORK – Investors sold off the
dollar Tuesday after the Federal Reserve said it was willing
to take more steps to support the economy, which could push
U.S. interest rates down even further.
The euro rose above $1.32 for the first
time since Aug. 10, while the dollar touched below 85 yen
for the first time since the Bank of Japan's intervention
in currency markets last week.
The Fed did not say that it planned to start
a program of buying Treasury and mortgage bonds to drive
down interest rates and stimulate the economy, but did say
more strongly than it has before that it would do so if
necessary.
"They've told us that they're going
to have to do something else if things continue the way
they are," said David Watt, senior currency strategist
at RBC Capital in Toronto. The Fed is worried that companies
are not hiring enough to bring down the unemployment rate,
and that inflation is too weak to support growth.
The prospect of the Fed initiating such
a step this year has been weighing on the dollar. Lower
interest rates tend to hurt a currency's value. The Fed
has kept the key U.S. rate at a range near zero since December
2008, and signaled no intent to start increasing interest
rates Tuesday.
In late afternoon trading in New York, the
euro was worth $1.3249, up from $1.3062 late Monday, while
the dollar dropped to 85.06 Japanese yen from 85.77 yen.
The British pound gained to $1.5625 from $1.5545.
The expectation that the Fed will act when
it meets next in early November is likely to drag on the
dollar, said David Gilmore of Foreign Exchange Analytics.
In other trading late Tuesday, the dollar
fell to 0.9983 Swiss francs from 1.0061 Swiss francs, and
dropped to 1.0247 Canadian dollars from 1.0287 Canadian
dollars.