Dollar rises after Fed meeting

TOKYO: The dollar gained further ground in Asia on Thursday after the US Federal Reserve confirmed it will end its bond-buying programme this month and indicated further credit easing is unlikely.

Many market players started buying dollars after the Fed announcement.

The euro, also weighed down by Greek debt worries, fell to $1.4304 in Tokyo afternoon trading from $1.4349 in New York late Wednesday.

The European single currency traded at 115.08 yen, down from 115.21 yen. The dollar firmed to 80.45 yen from 80.31 yen.

In a closely watched announcement, the Fed's interest rate-setting body, the Federal Open Market Committee, said on Wednesday it would keep the federal funds rate at near-zero levels "for an extended period".

The Fed also slashed about a half point off its estimate for US economic growth for 2011, to a range between 2.7 percent and 2.9 percent.

Markets had been waiting to see what kind of new stimulus policies the Fed might pursue after the end of June, when it plans to conclude its $600-billion second round of quantitative easing, dubbed QE2.

After the FOMC meeting, the dollar was bought back by investors who had expected the Fed to announce further credit easing to prop up the flagging recovery in the world's largest economy, dealers said.

The focus of forex traders is now shifting back to Europe, they added.

Europe gave heavily-indebted Greece a two-week deadline on Monday to drive through painful new austerity measures in order to gain access to emergency funds needed to avert a default.

Prime Minister George Papandreou must persuade parliament to approve a five-year, 28-billion euro package of tax increases and spending cuts to win a new bailout and avoid a possible fresh global economic crisis.

"The market is now moving its focus back to the Greek debt problem especially whether the Greek austerity vote will be passed next week," said Teppei Ino, analyst at the Bank of Tokyo-Mitsubishi UFJ.

"Depending on the outcome, euro selling against the greenback may accelerate amid dollar-positive sentiment following the FOMC," Ino said.

The dollar was higher against other Asian currencies, rising to Sg$1.2346 from 1.2324 and to 1,076.60 Korean won from 1,074.30.

The unit also gained to 43.49 Philippine pesos from 43.37, to 8,602.50 Indonesian rupiah from 8,590.00 and to 30.49 Thai baht from 30.45. But it slightly eased to Tw$28.87 from 28.89.

Copyright AFP (Agence France-Presse), 2011