The U.S. central bank is buying $85 billion of bonds a month in the third round of its quantitative-easing strategy to spur the economy, which may debase the dollar. While policy makers reiterated after their March meeting the Fed will maintain its purchases until there’s significant improvement in the labor market, Bernanke told reporters the pace may be altered if warranted by a healing economy.
The Fed’s next policy meeting is April 30-May 1.
The euro fell earlier today against the dollar after retail sales in the 17-nation region fell 0.3% in February from the previous month and slid 1.4% versus a year earlier, the European Union’s statistics office said.
The greenback touched the strongest level against the shared currency yesterday since Nov. 21, $1.2746, after European Central Bank President Mario Draghi said euro area policy will remain accommodative for as “long as needed.” The ECB kept its benchmark interest rate unchanged at 0.75%.
The dollar jumped as much as 3.6% yesterday against the yen, the most since October 2011, after the Bank of Japan said it will increase its bond purchases to 7.5 trillion yen ($77 billion) a month and double the monetary base, which includes cash in circulation, in two years. Policy makers under new Governor Haruhiko Kuroda are working to end 15 years of deflation and two decades of economic stagnation.
Billionaire investor George Soros and Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said the BOJ’s plan to end deflation risks weakening the Japanese currency.
“If the yen starts to fall, which it has done, and people in Japan realize that it’s liable to continue and want to put their money abroad, then the fall may become like an avalanche,” New York-based Soros said today in an interview on CNBC.