Dollar lower in Asia after US Fed holds steady


The dollar eased against the yen in Asia Thursday, after the US Federal Reserve announced it would keep its stimulus measures in place to safeguard a tentative economic recovery, dealers said.

The dollar fell to 82.04 yen in Tokyo morning trade from 82.16 yen in New York late Wednesday.

The euro edged lower to $1.3692 from $1.3708 late Wednesday in New York. The single currency rose to 112.54 yen from 112.34 Wednesday.

The Federal Open Market Committee — the Fed’s interest-rate setting panel — ended a two-day meeting Wednesday with a pledge to continue the $600-billion quantitative easing plan designed to jolt the US economy out of its slumber.

Despite signs of a “continuing” recovery, the Fed kept its foot on the accelerator, continuing emergency bond purchases and keeping interest rates at the ultra-low rate of zero to 0.25 percent.

“The dollar is under pressure after the Fed made the decision as, despite some improvement in household spending, the economic recovery is not yet strong enough,” said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.

“The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions,” FOMC members said in a statement.

Since the last Fed policy meeting in December, unemployment has dropped to 9.4 percent and most economists see a diminishing risk of a downward spiral of wages and prices.

Market reaction was muted following the release early in the morning of Japan’s upbeat trade surplus data, dealers said.

Japan’s trade surplus grew 34 percent from a year before to 727.7 billion yen in December, larger than the market forecast of 474.8 billion yen. The surplus in 2010 also more than doubled to stage its first annual rise in three years.

Volume was thin in early Asian trade, Keiichi Iguchi, senior dealer at Resona Bank told Dow Jones Newswires.

But investors’ attention is now shifting to US GDP data due Friday and a potential Chinese rate hike, which could come ahead of Chinese New Year Day (3 February), Iguchi said.