US dollar tumbles after Fed decision, gold falls

NEW YORK, Feb 2 (Bernama) -- The US dollar fell sharply in late trading on Wednesday after the Federal Reserve announced a quarter-point interest rate hike, reported Xinhua.

The dollar index, which measures the greenback against six major peers, decreased 0.9 per cent to 101.1840.

In late New York trading, the euro was up to US$1.0983 from US$1.0863 in the previous session, and the British pound increased to US$1.2376 from US$1.2321 in the previous session.

The US dollar bought 128.81 Japanese yen, lower than 130.16 Japanese yen of the previous session. The US dollar fell to 0.9093 Swiss francs from 0.9158 Swiss francs, and it decreased to 1.3297 Canadian dollars from 1.3307 Canadian dollars. The US dollar weakened to 10.3522 Swedish Kronor from 10.4657 Swedish Kronor.

The Fed, as expected, on Wednesday increased the fed funds rate a quarter point to 4.5 per cent to 4.75 per cent.

"Inflation has eased somewhat but remains elevated," the Fed said in a statement after a two-day meeting, while reiterating that "ongoing increases in the target range will be appropriate." 

In Chicago, gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as investors took profits ahead of the Federal Open Market Committee (FOMC) announcement.

The most active gold contract for April delivery fell US$2.5, or 0.13 per cent, to close at US$1,942.8 per ounce.

Shortly after the floor trading of gold closed, the FOMC announcement came out, indicating that the Federal Reserve would raise its interest rates by 25 basis points as expected.

Gold kept falling after the rate hike announcement.

Silver for March delivery fell 22.7 cents, or 0.95 per cent, to close at US$23.609 per ounce. Platinum for April delivery fell US$19.4, or 1.9 per cent, to close at US$1,001.7 per ounce. 

--BERNAMA