The dollar declined to an almost seven-month low as the Federal Reserve unexpectedly refrained from reducing its $85 billion in monthly bond purchases and will keep pumping money into the economy.
The U.S. currency fell the most against Brazil’s real and Turkey’s lira among its 16 most-traded peers after Fed policy makers “decided to await more evidence” of economic progress, including holding its interest-rate target at almost zero until the unemployment rate falls below 6.5 percent. A survey of economists conducted by Bloomberg forecast a $5 billion reduction of Treasury purchases. The pound strengthened versus the dollar after Bank of England minutes showed policy makers saw no need for more stimulus.
“The lack of tapering and lack of adjustment to the unemployment threshold is driving the dollar lower,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview. “It’s one of the most dovish outcomes possible.”
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