Dollar Extends Gain After Federal Reserve Keeps Low Interest Rates Pledge

The dollar extended gains after the Federal Reserve took no additional monetary policy steps to stimulate the economy.

The U.S. currency rose for a second day as policy makers led by Chairman Ben S. Bernanke repeated their pledge to keep interest rates low through mid-2013, while refraining from taking new actions to lower borrowing costs. The euro fell to an 11-month low against the dollar on concern European leaders won’t agree on ways to expand the region’s rescue capacities as debt-strapped nations struggle to fund their deficits.

“There was no indication of QE3,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets under administration, referring to the Fed’s policy of asset purchases, known as quantitative easing, or QE. “It led to some modest firming of the U.S. dollar against the majors like the euro.”

The dollar gained 1 percent to $1.3062 at 2:26 p.m. in New York, touching $1.3048, the strongest level since Jan. 12. The shared currency dropped 0.9 percent to 101.81 yen, touching the lowest since Oct. 6. The dollar fell 0.1 percent to 77.94 yen.