Dollar Stumbles for Fifth Week on Prospects the Fed Will Fire up the Printing Presses Again

The dollar fell for a fifth week against the euro, matching a losing streak that ended in December 2008, as traders speculated the Federal Reserve will further ease monetary policy, debasing the greenback.

The U.S. currency dropped this week to a 15-year low against the yen and fell to parity with the Australian and Canadian dollars before next week’s Fed report on regional economies. Asian currencies rallied against the dollar as Singapore sought faster currency appreciation, pulling back from efforts to stem gains.

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“There’s a bit of push and pull in dollar weakness: the push has been revolving around quantitative easing, and the pull has been the attractiveness of emerging-market currencies,” said Alan Ruskin, global head of Group of 10 foreign-exchange strategy at Deutsche Bank AG in New York.

The dollar fell 0.3 percent to $1.3977 per euro, from $1.3939 on Oct. 8 It slid to $1.4159 yesterday, the weakest level since Jan. 26. The greenback slid 0.6 percent to 81.45 yen, from 81.93 last week. It touched 80.88 yesterday, the weakest level since April 1995, when it reached the post-World War II low of 79.75 yen. The euro dropped 0.3 percent to 113.88 yen, from 114.19.

The U.S. currency’s five weeks of decline against the euro tied a stretch of losses during a period that ended Dec. 26, 2008. The central bank cut its fed funds target that month to a range of zero to 0.25 percent.

Aussie at Parity

Australia’s dollar touched $1.0004 yesterday, trading stronger than the greenback for the first time since currency controls ended in 1983. The Aussie appreciated 0.6 percent to 99.07 U.S. cents this week.

Canada’s dollar rose to parity on Oct. 14 for the first time since April, touching 99.81 cents versus its U.S. counterpart on speculation the nation’s economy will benefit from more purchases of government debt by the Fed, a policy known as quantitative easing. The loonie ended the week up 0.1 percent to C$1.0104 per U.S. dollar.

The Dollar Index, used by Intercontinental Exchange Inc. to track the greenback against currencies including the euro, yen and pound, fell 0.4 percent to 77.041 after touching 76.144 yesterday, the lowest level since Dec. 11.

The gauge of the greenback has dropped 4.2 percent since Sept. 21, when the Fed said in a statement following its policy meeting that it’s prepared “to provide additional accommodation if needed” to support the recovery.

Bernanke’s View

Fed Chairman Ben S. Bernanke said yesterday in remarks at a Boston Fed conference that the central bank may expand asset purchases or change the language in its statement, while saying “nonconventional policies” have costs and limitations. “There would appear — all else being equal — to be a case for further action,” Bernanke said.

The central bank will release on Oct. 20 its Beige Book survey of regional Fed banks. Last month, the report found the economic rebound showed signs of slowing. Minutes of the Fed’s September meeting released on Oct. 12 indicated that policy makers were poised to take more easing steps “before long.”

The U.S. consumer price index rose 0.1 percent in September after 0.3 percent gains in the prior two months, the Labor Department reported yesterday. The median forecast of 79 economists in a Bloomberg News survey was for a 0.2 percent increase.

“CPI showed benign inflation pressures across the board, which are not likely to hinder the Fed from embarking on additional asset purchases,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage.

Singapore’s Dollar

Singapore’s dollar rallied for a ninth week, advancing 0.8 percent to 1.2958 per dollar after the city state said it would allow its currency to appreciate in a bid to control inflation.

Malaysia’s ringgit gained 1 percent to 3.0820 against the dollar after touching 3.0800 on Oct. 14, the strongest level in 13 years. South Korea’s won climbed 0.8 percent to 1,111.50 versus the dollar after reaching 1,110.05 this week, the strongest level since May 3.

The Bloomberg-JPMorgan Asia Dollar Index climbed 0.4 percent to 115.93, advancing for a seventh straight week. The index reached 115.97 yesterday, the highest since April 2008.

The U.S. Treasury Department said it will delay a report on international currencies, including China’s yuan, while citing progress in the acceleration of the pace of the yuan’s rise.

Stronger Yuan

The yuan advanced 0.5 percent this week and touched 6.6406, the strongest level since the central bank unified official and market exchange rates at the end of 1993.

The report will be delayed until after the meetings of the Group of 20 nations in the coming weeks, according to a statement from the Treasury.

The greenback has tumbled 5 percent against the yen since Sept. 15, when Japan acknowledged intervening in the market by selling the currency to prevent its strength from undermining the nation’s export-dependent economy.

“Everybody is very cautious about a possible Bank of Japan intervention in the near term,” said Hidetoshi Yanagihara, a senior currency trader at Mizuho Financial Group Inc. in New York. “The market has been weak-dollar for a long time.”