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Greenback drops on Bernanke remarks

US stocks have pushed higher but the dollar dropped after the Federal Reserve left interest rates unchanged and chairman Ben Bernanke called debt the country's leading long-term problem.

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Source: AFP


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The Fed left the door open for more economic stimulus while saying its current $US600 billion ($A556.2 billion) program to inject liquidity into the economy would be allowed to run its forecast course through June.

The dollar fell sharply against the euro, however, as Bernanke reiterated the economy's weaknesses and need for low rates despite rising inflation, in a first-ever press conference following a meeting of the central bank's policy-making panel.

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By the end of Bernanke's one-hour meeting with journalists, the euro was at $1.475, compared with the average level of about $1.467 during the morning and $1.464 late Tuesday.

Bernanke told reporters that the country face a huge problem in its massive debt load.

"It's the most important economic problem, at least in the longer term, that the United States faces," he said.

Investors have pointed to loose Fed policy as a source of US dollar weakness. Mr Bernanke told reporters at a briefing that a strong US dollar was in the US interest but said the central bank

could best ensure a strong currency by creating the conditions for solid growth, NZPA reported.

"In our view, if we do what's needed to pursue our dual mandate for price stability, maximum employment, that will also generate fundamentals that will help the (US) dollar in the medium term," he said.


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