Dollar slump against major counterparts amid central bank easing

The dollar declined versus most major counterparts as traders estimated policy makers in the U.S. will maintain or expand monetary stimulus measures. The greenback fell for a fifth day against the euro after Federal Reserve Chairman Ben S. Bernanke stated economic conditions aren’t where he’d like them to be. The dollar plunged 0.4 percent to $1.3060 per euro as of 11:30 a.m. in Tokyo after reaching $1.3068, the least since March 15. It moved a little at 99.38 yen after earlier rising as high as 99.66, the most since May 2009. “The European Central Bank has been reducing the size of their balance sheet whereas the Fed and the BOJ are increasing the size of their balance sheets,” said Richard Grace, the Sydney-based chief currency strategist and head of international economics at Commonwealth Bank of Australia. (CBA) “We’re seeing broad-based dollar weakness based on Bernanke’s comments.” Fed Easing Bernanke said yesterday that Fed tests of whether U.S. financial firms could survive a severe recession have powered up the banking system and helped economic development. “Today the economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be,” he said in a speech in Stone Mountain, Georgia. The Fed is purchasing $85 billion of bonds a month in the third round of its quantitative-easing strategy to spur growth. Policy makers reiterated after their March meeting that the central bank will keep up its buys until there’s significant development in the labor market. Bernanke probably will be succeeded by Vice Chairman Janet Yellen when his term ends Jan. 31, according to a survey last week by International Strategy & Investment Group. Sixty-five percent of those polled at the organization’s conference last week said Yellen, 66, is most likely to be nominated for the top job, according to a report yesterday by Roberto Perli, a Washington-based managing director at the investment research firm.