BL: Dollar Soars Against Euro, Yen as Federal Reserve Increases Discount Rate
By Oliver Biggadike and Ben Levisohn
Feb. 18 (Bloomberg) -- The dollar reached its strongest level in nine months against the euro as the Federal Reserve raised the discount rate by a quarter-point to 0.75 percent and said the move does not signal a change in its policy outlook.
The dollar gained against the yen as policy makers said in a statement that the move is “intended as further normalization of the Federal Reserve’s lending facilities.” The euro earlier rose against the dollar on speculation the Swiss National Bank sold the Swiss franc in an effort to cap the currency’s gains.
“It’s a surprising issue. In the last FOMC minutes the Fed indicated that they would raise the discount rate in the near future but nobody expected it to be today,” said Hidetoshi Yanagihara, a senior currency trader at Mizuho Corporate Bank in New York. “It might indicate the Fed will change monetary policy in a much shorter term.”
The dollar rose 0.5 percent to $1.3539 per euro at 4:46 p.m. in New York, from $1.3607 yesterday. It touched $1.3502, the strongest level since May. The greenback appreciated 0.6 percent against the yen, to 91.77 from 91.25.
To contact the reporters on this story:
Oliver Biggadike in New York at
obiggadike@bloomberg.net;
Ben Levisohn in New York at
blevisohn@bloomberg.net
Last Updated: February 18, 2010 16:52 EST
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