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Dollar falls after Fed holds course on rates

The dollar on Wednesday weakened against other major currencies after the US Federal Reserve kept its policy of ultra-low interest rates and did not accelerate the time-frame for raising them.

NEW YORK: The dollar on Wednesday weakened against other major currencies after the US Federal Reserve kept its policy of ultra-low interest rates and did not accelerate the time-frame for raising them.

The Fed, as expected, reiterated its policy of tapering stimulus while keeping monetary policy "highly accommodative."

However, some analysts had thought the Fed could signal a faster time-frame for lifting benchmark interest rates. The Fed has previously suggested mid-2015 for the shift.

Instead, Fed Chair Janet Yellen downplayed recent data that shows accelerating, but still tame, inflation, and characterised unemployment as still too high. Speaking at a post-meeting news conference, she said there was "no mechanical formula" for when the Fed will lift benchmark interest rates.

As a result, analysts concluded the Fed sees no reason to move up the time-frame for raising rates.

"Unlike other central banks that have recently expressed their desire to become more active, the Fed remains comfortable with their current course and has no desire to alter the market's expectations," said Kathy Lien, managing director at BK Asset Management.

"While we don't expect a significant sell-off in the dollar, the greenback should extend its losses against the currencies of central banks who are looking to tighten."

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