The dollar today fell to its lowest levels in nearly seven months against other major currencies in international foreign exchange markets, after the U.S. central bank, the Fed, decided to maintain its stimulus packages, surprising many investors who had predicted a reduction.
In such circumstances, the euro reached its highest level against the greenback in seven and a half months, at 1.3568 dollars. It then stabilized at 1.3540 dollars, which means it is up 0.15 percent compared to yesterday’s closing. The decision of the U.S. Fed yesterday had a tumultuous echo in the markets, surprising given the expected start of the reduction of stimulus. Fed Governor Ben Bernanke decided to maintain the current bond-buying program, pointing to tighter financing conditions, and they also lowered forecasts for U.S. growth this year and next, citing pressures in the economy due to strict fiscal policy and higher mortgage rates. The Fed’s decision spurred a surge in prices of risky assets and currencies, putting pressure on yields of U.S. government bonds. In such circumstances, there were sell-offs of the yen, crashing the value of this safe-haven currency to its lowest level in the last 23 years against the Swiss franc, another currency where investors often seek refuge for their capital in uncertain times.
