The Dollar Index fell by the most since the first quarter of 2011 after the European Central Bankpledged to protect the euro from unraveling and the Federal Reserve committed to reduce unemployment via open-ended debt buying, which may debase the U.S. currency.
Since July 26, when ECB President Mario Draghi said he would do “whatever it takes” to save the euro, the 17-nation currency rose versus 15 of its 16 most-traded counterparts tracked by Bloomberg. Amid the Fed’s expansion of monetary stimulus, the Dollar Index lost 2.1 percent in the third quarter. The Bank of Japan, which followed the Fed and the ECB in expanding its balance sheet by 10 trillion yen ($130 billion), is scheduled to announce its next policy decision on Oct. 5.
“The ECB announcement to buy one- to three-year bonds in the periphery” shaped currency markets last quarter, George Davis, chief technical analyst for fixed income and currency strategy in Toronto at Royal Bank of Canada, said in an interview. “It was the opening of a new chapter.”
The dollar fell 1.5 percent during the past three months to $1.2866 in New York and touched $1.3172 on Sept. 17, the least since May. The common currency weakened 0.8 percent to 100.21 yen. The dollar lost 2.3 percent to 77.96 yen.
Big Winner
Sweden’s krona appreciated more than all of its major peers versus the dollar this quarter, gaining 5.4 percent. The South African rand had the biggest quarterly decline, slipping 1.8 percent versus the greenback
Brazil’s real has lost 7.9 percent versus the dollar in 2012, almost three times the decline of the rand, the second- biggest loser. The Mexican peso leads all 16 of the dollar’s biggest peers with a gain of 8.4 percent this year.
The New Zealand dollar led all major currencies this month against the greenback, appreciating 3.3 percent. The real increased the least out of 16 counterparts versus the dollar, gaining 0.2 percent.
The euro has fallen 0.7 percent during the past three months against a basket of nine other developed-market currencies, including the yen, pound and Australian dollar, according to Bloomberg Correlation-Weighted Indexes. Japan’s currency has declined 2.2 percent and the greenback has lost 4.3 percent, the most.
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