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Forex Minute - Dollar Drops After Fed Expresses Concern over Stronger Currency
Wednesday, 08 October 2014
The dollar dropped from near its strongest level in four years after the minutes of U.S. Federal Reserve’s most recent gathering indicated that most policy makers are worried that a stronger currency and declining global economy may hurt U.S. economic position.
The U.S. currency declined 0.6 percent against the euro to $1.2748. The euro rose 0.7 percent to trade at 137.80 yen while the yen slid 0.1 percent to 108.12 yen per dollar.
“It kind of looks like the Fed will take any excuse not to normalize rates in the near term,” Lennon Sweeting, a dealer at USForex Inc. in San Francisco, told Bloomberg News. “What we’re seeing is consolidation and probably a brief period of stability. Overall, the bull rally on the dollar is still intact.”
The South Africa’s rand jumped after an index of 20 emerging-economy currencies rose 0.1 percent to 87.6623. The rand rose 1.3 percent to trade at 11.0414 per dollar.
Meanwhile, the Indonesia’s rupiah plunged to its lowest level in eight months while shares fell after the nation’s upper house voted to elect an opposition figure as its leader, fuelling concern President-elect Joko Widodo will face hurdles in implementing radical reforms.
The rupiah fell 0.3 percent to 12,240 per dollar at the close of trade. It had earlier hit 12,260, its lowest level since January 28.
Zulkifli Hasan, who is affiliated to the National Mandate Party that was one of the parties that backed Widodo’s rival Prabowo Subianto, was named the speaker of the People’s Consultative Assembly on Wednesday.
Last week, an opposition candidate also won the post of the speaker of the lower house. The election of the two is expected to pose a threat to Widodo’s reform agenda that involves boosting tax collection, eliminating bureaucracy as well as reducing fuel subsidies.
From: Forex Minute
