U.S. Dollar Continues its Decline on Fed Tapering Speculation

The dollar declined, trading at almost the lowest in a month, as analysts trimmed projections for Federal Reserve reductions to the central bank’s bond-buying during a two-day meeting starting today.

The U.S. currency weakened as the Federal Open Market Committee will decide to slow its monthly purchases to $80 billion from $85 billion, according to the median estimate of economists in a Bloomberg News survey, less reduction than previous surveys. The euro strengthened for a second day against the dollar and yen after an industry report showed German investor confidence climbed more than forecast. India’s rupee fell the most in two weeks on speculation a reduction in U.S. stimulus may hurt demand for emerging-market assets.

“The market has been pricing in tapering and it’s likely to come sooner or later,” Robert Lynch, a currency strategist at HSBC Holdings Plc in New York, said in a phone interview. “It’s reasonable to expect they’ll emphasize the difference between quantitative easing and interest-rate policies. They’ll maintain a strong emphasis on that.”


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