Dollar Slips After Fed Decision; Yuan Also Falls
The U.S. dollar slipped on Thursday in Asia after the U.S. Federal Reserve raised rates as expected.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.1% to 96.393 at 1:00 AM ET (06:00 GMT).
Overnight, the central bank took the target range for its benchmark fund rate to 2.25-2.5% on Wednesday while forecasting fewer rate increases in 2019 than it had at its September policy meeting.
U.S. stocks stumbled up and down after the decision then ultimately closed sharply lower after Powell’s news conference.
Meanwhile, the USD/CNY pair was up 0.3% to 6.9111 after the People’s Bank of China said in a statement on Wednesday that it would supply lower-cost liquidity for as long as three years to banks that are willing to lend more to smaller companies.
Citing analysts, Reuters noted this move was effectively a targeted rate cut. The expectation of further monetary easing to combat a slowing economy could put more pressure on the yuan, the article added.
The People's Bank of China (PBOC) set the yuan reference rate at 6.8936 vs the previous day's fix of 6.8869.
Elsewhere, the USD/JPY pair lost 0.4% to 112.07 as the Bank of Japan maintained its ultra-loose monetary policy and kept its short-term rate target at minus 0.1% and the 10-year yield target around 0%.
The AUD/USD pair and the NZD/USD pair fell 0.2% and 0.5% respectively.