The dollar tumbled the most in at least 40 years against the Swiss franc after the Federal Reserve pledged to keep its key interest rate at a record low at least through mid-2013 to revive the flagging economic recovery.
The greenback declined versus the majority of its most- traded peers as the Fed said growth was “considerably slower” than it expected and it’s prepared to use a range of policy tools to boost the economy. The meeting came a day after economic weakening and a Standard & Poor’s U.S. credit-rating cut spurred a global stock rout. Commodity currencies recouped losses sustained just after the meeting. Stocks and gold surged.
“With the Fed saying they have tools available that they are willing to use and giving a more definitive time frame, that is overall going to be a dollar negative,” said John Doyle, a strategist in Washington at the currency-trading firm Tempus Consulting Inc. “Swiss franc and gold have absolutely been the beneficiaries of uncertainty.”
The dollar fell 4.5 percent to 72.09 Swiss centimes at 5 p.m. in New York, from 75.50 yesterday. It dropped as much as 6.3 percent, the most since the beginning of Bloomberg records in January 1971, touching a record low 70.71 centimes. The euro dropped 3.2 percent to 1.0364 after touching the record low 1.0075. The U.S. currency depreciated 1.4 percent to $1.4376 per euro and fell 1 percent to 76.96 yen.
Read the whole story here.