Dollar advances on Fed taper speculation

The dollar rose amid speculation Federal Reserve officials are still intending to slow the pace of asset purchases that have debased the currency.

The U.S. currency strengthened versus most of its major counterparts amid commentary from regional Fed presidents, one day after New York Fed President William C. Dudley said tapering was possible this year, depending on economic data. The Australian and New Zealand dollars weakened as Asian stocks declined, reducing demand for the region’s higher-yielding assets. The pound fell as a gauge of mortgage approvals rose less than forecast.

“Some people are taking short dollar positions off the table,” Douglas Borthwick, head of foreign exchange at Chapdelaine & Co. in New York, said in a telephone interview. “Yesterday, you saw a number of comments that made it seem that tapering was right on the cusp. Esther George will likely come out and move the taper issue even closer.” A short position is a bet that an asset will decline in value.

The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, rose 0.2% to 1,014.09 at 10:29 a.m. New York time after climbing to the highest level since Sept. 18.

The U.S. currency gained 0.1% to $1.3475 per euro after strengthening 0.2% yesterday. The greenback fell 0.3% to 98.57 yen. The euro declined 0.4% to 132.79 yen.

Kiwi, Aussie

The New Zealand dollar fell versus all 31 of its most- traded counterparts as declines in global stocks reduced investor appetite for higher-yielding assets. The MSCI Asia Pacific Index of shares fell 0.6%.

The so-called kiwi tumbled 1% to 82.93 U.S. cents after decreasing 1.3%, the most since Aug. 21. Australia’s dollar dropped 0.4% to 93.90 U.S. cents.

“The equity markets opened on a softer foot and we’re seeing a bit of weakness in the Aussie dollar as some risk comes off the table,” said Jim Vrondas, chief currency and payment strategist at OzForex Ltd. in Sydney. “I don’t expect it to have a long-lasting effect.”

Hungary’s forint depreciated against the majority of its major peers as the country’s central bank cut its benchmark interest rate to a record low after inflation slowed. The currency slid 0.6% to 222.67 per dollar and declined 0.5% to 300.01 per euro.

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