Dollar Index Falls to Lowest Since 2008 as GDP Misses Forecast; Yen Gains

The Dollar Index fell to its lowest level in more than two years as the U.S. economy expanded in the first quarter at a slower rate than forecast, encouraging the Federal Reserve to keep borrowing costs low.

The yen appreciated versus most of its major counterparts after a report showed Japanese investors sold foreign assets last week. New Zealand’s dollar was one of the worst performers against the greenback after Reserve Bank Governor Alan Bollard called the currency’s recent advance “unwelcome.” The dollar sank a day after Fed Chairman Ben S. Bernanke said he was unsure when monetary stimulus will unwind.

“The data is accelerating dollar weakness,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “The yen is firmer today because it now seems that there is more of a potential for repatriation back into the economy, which would drive up demand.”

IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, dropped 0.6 percent to 73.118 at 10:54 a.m. in New York, from 73.519 yesterday, after touching 72.871, the lowest level since July 2008.

The New Zealand dollar decreased for the first time in three days versus its U.S. counterpart after policy makers left the official cash rate unchanged at a record low 2.5 percent. The kiwi dropped 1 percent to 79.98 U.S. cents after reaching 81.08 cents yesterday, the highest level since March 2008.