The dollar fell to the weakest in seven months versus the yen amid speculation the Federal Reserve will announce bond buying to bolster the economy in a program of quantitative easing that tends to debase the currency.
The greenback traded at almost a four-month low against the euro before the central bank also releases policy makers’ forecasts for unemployment, inflation and the expected path of the federal funds rate. Sweden’s krona fell against all but one of its 16 major peers as consumer inflation slowed more than economists forecast and unemployment increased. South Africa’s rand was the worst performer of the most-active currencies for a second day as mining-industry labor unrest spread.
“The expectation is for the Fed to announce some form of new policy easing likely to be QE3 or new asset purchases,” Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage, said in a telephone interview. “Because that will likely involved printing new dollars to buy these assets, there’s an inevitable negative impact on the U.S. currency.”
The dollar fell 0.4 percent to 77.56 yen at 9:06 a.m. New York time, after reaching 77.43, the least since Feb. 14. It was little changed at $1.2900 per euro after touching $1.2937 yesterday, the weakest since May 11. The euro slipped 0.4 percent to 100.05 yen.
The Dollar Index fell a third day before the Fed concludes its two-day policy meeting at which economists surveyed by Bloomberg forecast a third round of QE will be announced.
South Africa’s rand weakened after Anglo American Platinum Ltd., the largest producer of the metal, said yesterday it suspended its Rustenburg operations after workers were intimidated. The threats follow stoppages at Lonmin Plc’s Marikana mine and Gold Fields Ltd.’s KDC West shaft.
About 43,000 people are either on strike at the three companies or staying away from work following conflict at Lonmin’s Marikana site last month in which 44 people died.
The rand fell 0.5 percent to 8.3784 per dollar.
Switzerland’s franc fell for a second day against the euro after the Swiss National Bank announced it would maintain its 1.20 limit against the shared currency.
The franc dropped 0.3 percent to 1.2120 per euro after declining to 1.2155 on Sept. 7, the weakest since Jan. 9.
The Canadian dollar traded close to a 13-month high versus the greenback amid mounting Fed stimulus speculation. The so- called loonie, nicknamed for the image of the waterfowl on the C$1 coin, gained against the majority of its 16 most-traded counterparts.
The loonie was little changed at 97.58 cents per U.S. dollar. It touched 97.14 cents on Sept. 11. One Canadian dollar buys $1.0250.