Dollar Holds Two-Day Drop as Fed Seen Keeping Record-Low Rates

RIFAN FINANCINDO BERJANGKA – The dollar held a two-day decline against the euro on bets U.S. policy makers meeting this week will say they intend to keep interest rates at a record low for an extended period even as they end bond buying.

A gauge of the U.S. currency headed for its first monthly drop since June as traders cut the probability the central bank will raise borrowing costs by October 2015 to a 49 percent chance from 85 percent odds at the end of last month. The Fed starts a two-day meeting today. The yen fell against all except three of its 16 major peers before the Bank of Japan sets policy this week with some economists predicting an expansion of monetary stimulus. Indonesia?s rupiah weakened.

The dollar was little changed at $1.2701 per euro as of 2:34 p.m. in Tokyo after declining 0.4 percent in the previous two days. The U.S. currency was also little changed, at 107.86 yen after falling to 108.38 yen yesterday, the least since Oct. 8. The yen weakened 0.1 percent to 136.99 per euro.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, was little changed at 1,066.48. It has dropped 0.4 percent in October.

The Federal Open Market Committee indicated at its September meeting that it planned to end its bond-purchase program this month. Policy makers have kept their key interest rate at zero to 0.25 percent since December 2008.

Source: Bloomberg