Morgan Stanley said the dollar will suffer more losses as thegreenback fell for a second day after the Federal Reserve refrainedfrom tightening policy and lowered its long-term path for interestrates.

The U.S. currency weakened versus most of it major peers, pushingits drop this year beyond 4 percent, as traders digested the Fedannouncement and the Bank of Japan's move to shift the focus of itsstimulus to controlling interest rates. An index of 20emerging-market currencies gained for a fourth straight day.

“The U.S. dollar decline has more weeks to go, we think abouttwo months,” Hans Redeker, Morgan Stanley's chief global currencystrategist in London, said in an interview with BloombergTelevision. “We suggest that the U.S. dollar will extend itsdecline, index-wise, between 4 percent to 5 percent.”