Dollar remains down after Fed announcement

The dollar remained near a seven-month low today was likely to stay around this mark for the foreseeable future after last week’s announcement by the US Federal Reserve that it was to kick off a fresh round of quantitative easing.

The euro maintained its strong performance of late by staying close to its four-month peak against the greenback, boosted by the Fed’s decision to help the US economy as well as the European Central Bank’s announcement earlier in September that it was set to lower the borrowing costs for struggling euro nations such as Italy and Spain.

The dollar index, which records the greenback’s value versus a basket of currencies, was at 78.876, after having gone down to 78.601 on Friday, the lowest it has been since the end of February.

The single currency fell by 0.1 per cent to $1.3109, dropping from a high of $1.31691 hit last Friday. It has now gone up by approximately nine per cent since sinking to a two-year trough of $1.2042 in July.

Standard bank’s head of G10 currency research Steve Barrow said that the common currency’s momentum is not over and is expected to climb further still. He went on to say that it could dip slightly towards $1.30, but not much lower than that as that’s where the market is likely to consolidate. He added that it may go up to between $1.3250 and $1.3300 during the next couple of weeks.