Dollar Gains Most in Two Weeks Versus Yen on Fed Bond Plan; Aussie Slides
The dollar rose the most in two weeks against the yen after the Federal Reserve acted to lower only long-term borrowing costs and on concern the Bank of Japan may act to stem gains in the nation’s currency.The Dollar Index rose to a seven-month high after the Federal Open Market Committee said it will shift Treasury holdings to longer-term securities. The 17-nation euro rallied versus the yen as Greece said it will accelerate budget cuts to keep emergency loans flowing. Australia’s dollar slid below parity with the greenback after a survey said China’s manufacturing may slow. The Fed said yesterday it will buy $400 billion of bonds with maturities of six to 30 years through June, while selling an equal amount of debt maturing in three years or less. The central bank will also reinvest maturing mortgage debt into mortgage-backed securities instead of Treasuries. The action “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said.
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