HONG KONG: The dollar came under fresh pressure in Asia on Thursday after the Federal Reserve decided against lifting interest rates but the prospect of cheap cash for longer fed another rally in regional equity markets.
At the end of one of its most anticipated meetings for some time, the central bank’s policymakers said the economy continued to improve and the argument for a rise was strengthening but more evidence of sustained progress was needed, reports AFP.
However, while they lowered their growth forecast for this year, the policy committee said the rebound would continue through the second half, and suggested borrowing costs could rise before the end of the year.
The decision to stick to the easy money policy for the time being came hours after the Bank of Japan overhauled its own stimulus programme to target inflation and held off cutting interest rates further into negative territory.
Wednesday’s announcements helped soothe recent investor concerns that the age of cheap cash—which has supported markets for years—could be coming to an end, fuelling talk of an equity correction.
“With both the BoJ and the US Fed doing nothing to upset the apple cart, the markets got what they wanted. And after selling off, have now bounced and look good technically,” Chris Conway, head of research at Australian Stock Report, said.
Traders sold off the dollar as they looked for currencies with better, if riskier, returns.
The South Korean won soared 1.5 percent against the greenback while the Indonesian rupiah climbed 0.3 percent and the Australian dollar rallied 0.4 percent. Malaysia’s ringgit jumped 0.6 percent while the Singapore dollar put on 0.5 percent.
The greenback also fell toward the 100 yen mark, having rallied close to 103 yen earlier Wednesday in reaction the the BoJ move. It bought 100.22 yen in Asia, compared with its 100.33 yen in late New York business. The euro and pound also extended gains.