The dollar rose after the Federal Reserve officials voted to reduce monthly asset purchases that are seen as debasing the U.S. currency amid signs that economic growth is strengthening.
The U.S. currency strengthened versus the yen after the central bank announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s. The Fed acted as a report showed housing starts last month reached a five-year high and the Labor Department reported Dec. 6. the unemployment rate declined to 7 percent in November, the lowest in five years.
"The dust still has to settle, but ultimately it's positive for the dollar," Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc., said in a phone interview. "The fact the Fed did taper shows it's confident about the pace of recovery, and the financial market can withstand modest reduction at this time."
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