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Dollar drops after FederalReserve meeting

News  by Akintaro oluwafemi akins


The dollar dropped Thursday as records from

the Federal Reserve’s last meeting dampened

hopes of an imminent US interest rate hike.

Minutes from the US central bank’s July

gathering said policymakers were keeping

their “options open” but remained divided

on the threat of inflation.

A hike in US borrowing costs would tend to

lift the dollar by stirring demand for dollar-

denominated assets, so Wednesday’s minutes

weighed on the unit.

The news comes after William Dudley, the

influential head of the Federal Reserve’s New

York branch, unexpectedly hinted this week

that a rate hike was possible as early as

September.

“The message appears to be that as much as

a September hike is a possibility, the Fed is

unlikely to move until there is a consensus

on the outlook for growth, hiring and

inflation,” Rodrigo Catril, a currency

strategist at National Australia Bank, said in a

commentary.

“Recent data would therefore suggest a hike

is not imminent.”

The dollar fell as low as 99.65 yen from

100.28 yen Wednesday in New York, before

creeping back above the 100 yen level in

afternoon trading.

The euro was down at 113.11 yen from 113.19

yen, while it rose to $1.1306 from $1.1287.

The yen has been on a tear since wild market

volatility at the start of the year and Britain’s

June vote to quit the European Union pushed

investors into the currency, seen as a safe bet

in times of turmoil.

This year, the Japanese currency has surged

more than 20 percent against the dollar and

about 15 percent against the euro.

On Thursday, the dollar also fell against most

higher-yielding, but riskier, emerging market

units.

The Malaysian ringgit tacked on 0.5 percent

against the US unit, while the Indonesian

rupiah was up 0.3 percent and the Thai baht

rose 0.2 percent.

The South Korean won, Singapore dollar and

Philippine peso also advanced.

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