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Join Date: Nov 2008
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The dollar extended its decline a day after the US Federal Reserve said that it would pump a trillion dollars into the financial system.
![]() The central bank's decision to buy long-term Treasury bonds and mortgage securities -- an effort to force down interest rates -- made US assets less attractive to investors and dampened demand for greenbacks, dealers said. At 1900 GMT, the euro was quoted at 1.3657 dollars from 1.3509 dollars late in New York on Wednesday. Against the Japanese currency, the dollar fell to 94.53 yen from 96.03 yen on Wednesday. The dollar lost more than three percent against the euro Wednesday, hitting a two-month low, while falling more than two percent versus the yen. Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi, called the Fed's move "a game changer." The dollar's decline reflects both its diminished appeal as a store of value and reduced relative yield appeal," Hardman wrote in a note. The Fed said it would buy up to 300 billion dollars in long-term US Treasury bonds over the next six months and boost its purchases of mortgage securities by 750 billion dollars in an effort to revive the ailing economy. The Fed's efforts to get more money into circulation prompted investors to rethink their view of the dollar as a relatively safe bet. "Fears that the US will print money and debase the currency is leading to a questioning of the dollar as a safe haven and could push the price of gold much higher," NAB Capital analyst John Kyriakopoulos said. Source |
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