The United States Dollar gained against safe-haven currencies on Wednesday after the Federal Reserve committee announced it has approved plans to speed up pandemic stimulus withdrawal process.
The Dollar Index rose to a three-week high of 96.87 on Wednesday before dropping to 96.14 on Thursday during the London trading session.
However, against the Japanese Yen, a known haven currency, US Dollar sustained its gain at 114.153, up from 113.52 on Tuesday. But the greenback failed to keep its gain against the Swiss Franc after hitting 0.92940 on Wednesday. It drops to 0.92318.
This was after the US Federal Reserve maintained interest rates at 0 to 0.25 percent to achieve maximum employment despite the surge in inflation to a four-decade high.
The Committee, however, agreed to reduce monthly stimulus purchases by $20 billion for treasure securities and $10 billion for agency mortgage-backed securities.
“Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage‑backed securities by at least $20 billion per month. The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook.
“The Federal Reserve’s ongoing purchases and holdings of securities will continue to foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.”
