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NEW YORK - The dollar lost ground against the euro and yen on Tuesday, as investors' appetite for risk was boosted by the Federal Reserve's decision to keep the cost of borrowing at historic lows.
The euro was changing hands at 1.3774 dollars late on Tuesday, up from 1.3677 in New York late Monday.
The dollar was lower against the Japanese currency, trading at 90.28 yen versus 90.45 on Monday.
"The Fed's commitment to low rates prompted a brief bout of USD selling," said Michael Woolfolk of Bank of New York Mellon, referring to the US currency.
Traders were buoyed by the Federal Reserve's commitment to keep key interest rates close to zero percent "for an extended period."
The Fed voted nine to one to keep principal rates at zero to 0.25 percent, with dissent coming in the form of committee member, Kansas City Fed president Thomas Hoenig, expressing concerns about the risk involved in keeping rates so low.
"Once forex traders saw the words reappear in the statement and saw that Hoenig was the only dissenter, they bailed out of dollars," said Kathy Lien of Global Forex Trading.
The euro also rallied against the dollar as Greece avoided a new downgrade of its sovereign debt, which has shaken the European single currency.
Standard & Poor's, a top credit rating agency, said it was maintaining Greece's credit ratings as it lifted a threat in the short-term to lower the note.
Earlier in Brussels European Union finance ministers backed a eurozone plan to make emergency loans available to Greece -- if needed -- to shield the country from bankruptcy.
In late New York trading, the pound rose to 1.5258 dollars from 1.5041 late Monday. The dollar slid to 1.0541 Swiss francs from 1.0618.
- AFP /ls
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