Dollar climbs after the Fed
The U.S. central bank says the economy will remain weak even as the pace of the decline has slowed.
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| Click the chart for current FX rates. |
NEW YORK (CNNMoney.com) -- The dollar rose against rival currencies Wednesday as investors took shelter in the U.S. currency after the Federal Reserve said the economy would "remain weak for some time."
The Fed also indicated that the pace of the economic contraction has slowed but didn't signal any major change in its unconventional monetary policy measures, including its purchases of U.S. Treasury bonds and mortgage backed securities.
As was widely expected, the U.S. central bank held its key interest rate steady at a historic low near zero percent.
The dollar was up 1.2% against the euro to $1.3913 and gained 0.3% versus the British pound to $1.6401. Against the Japanese yen, the greenback rose 0.5% to ¥95.7.
The Fed's "Failure to ease concern about the economy has led to a flight to safety back into U.S. dollars," said Kathy Lien, head of currency research at Global Forex Trading. "Traders were disappointed that the central bank did not mention an exit strategy," she added.
Investors view the dollar as a safe haven and typically use it a way to preserve capital in times of economic turmoil.
Lien said the Fed's decision to forego any major policy changes "implies that they think the U.S. economy is not recovering strongly enough for them to even consider how and when to remove monetary stimulus."
Wall Street turned mixed after the Fed announcement, with blue chip stocks falling as technology stocks held gains.
Bond prices fell sharply, giving back earlier gains, with the yield on the bench-mark 10-year note rising to 3.69%.
The euro came under pressure earlier Wednesday after the European Central Bank offered 442 billion euros in one-year debt to help spur lending and boost the European economy.
Meanwhile, the Swiss franc fell sharply after the Swiss National Bank began selling the currency in an effort to weaken the it and support the nation's economy, traders said.
The dollar rose to a high of $1.1023 against the Swiss franc before easing to trade at $1.0938. 
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