Dollar Drops After US Federal Reserve Keeps Interest Rates Unchanged

The US dollar fell against major currencies yesterday after the Federal Reserve, the US central bank, issued an expected decision to keep interest rates unchanged, while the New Zealand dollar plunged sharply after the country’s central bank unexpectedly left interest rates unchanged. The US central bank, as anticipated, decided to hold interest rates steady, preferring to postpone any changes in borrowing costs until after the US midterm congressional elections scheduled for next week, pending further data on the trajectory of inflation. The euro rose 0.32 percent against the US dollar to $1.1160. Against the Japanese yen, the dollar gained 0.04 percent to 157.87 yen. Mark Chandler, chief market analyst at Bannockburn Global Forex, said, “The US dollar is weaker than it was before the Federal Open Market Committee meeting, as the yield curve experienced further steepening.” The US Dollar Index, which measures the strength of the US currency against a basket of six other currencies, fell 0.2 percent to 102.15 points. The British pound rose 0.12 percent to $1.3323 and fell about 0.08 percent against the euro. The New Zealand dollar dropped 1.74 percent to $0.5583 after the Reserve Bank of New Zealand kept interest rates at 2.75 percent, surprising the vast majority of economists who had expected a rate hike. The Canadian dollar advanced 0.37 percent to 1.40 against the US dollar. The European Central Bank and the Bank of Japan are expected to announce their monetary policy decisions on Thursday and Friday, respectively, with both central banks anticipated to keep interest rates unchanged.