The dollar fell against most major currencies on Wednesday as new data showed U.S. inflation easing, paving the way for additional rate cuts from the Federal Reserve.
According to the U.S. Labor Department, the Consumer Price Index plunged 1.0 percent in October, the biggest drop since the department began keeping monthly records of consumer prices in 1947. Core consumer prices, which exclude food and energy, fell by 0.1 percent last month, the first drop in core prices in more than a quarter-century.
The Labor Department's Producer Price Index decreased 2.8 percent in October, said a report released Tuesday. The decline was the sharpest one-month fall on record and was much more than expected.
Federal Reserve Vice Chairman Donald Kohn said Wednesday that the risk of deflation remains small, but is larger than it was months ago. Deflation is a period of recurring declines in prices. The United States has not suffered through a prolonged bout of deflation since the Great Depression of the 1930s.
Officials of the central bank slashed economic growth forecasts through 2009 and were ready for deeper rate cuts in case the economy deteriorates further, according to the minutes of the Federal Reserve's October policy meeting that were released Wednesday.
The euro bought 1.2602 dollars in late New York trading compared with 1.2579 dollars late Tuesday. The pound rose to 1.5025 dollars from 1.4916 dollars.
The dollar rose to 1.2102 Swiss francs from 1.2043 Swiss francs, and fell to 96.37 Japanese yen from 96.46 Japanese yen. It rose to 1.2483 Canadian dollars from 1.2375 Canadian dollars.
(Xinhua News Agency November 20, 2008)
