Tokyo - The dollar faced further pressure in Asia on Thursday morning, extending losses seen in New York after the US Federal Reserve's surprise decision to keep its aggressive stimulus programme intact.
In morning trade, the greenback fetched 98.11 yen, down from 98.13 yen in New York on Wednesday where it had dropped from 99.19 in Tokyo before the Fed announcement.
The euro also advanced, buying $1.3523 in Tokyo - its highest level since February - against $1.3511 in New York, and well up from $1.3353 earlier on Wednesday.
The European currency also rose to 132.68 yen from 132.55 yen.
Investors had expected the US central bank to begin cutting down its $85-billion-per-month bond-buying programme following broadly upbeat data on the world's number one economy.
However, the bank instead lowered its growth forecast for 2013 and 2014, while its chairman Ben Bernanke warned of possibly “very serious consequences” from a brewing political battle in Washington over a new budget and the debt ceiling.
However, he said the Fed could still taper the programme later this year if the outlook improves.
The decision will have raised some eyebrows in markets, National Australia Bank said in a note on Thursday.
“For the Fed, it is difficult to avoid the conclusion that it has completely messed up its communication policy. We are now back to watching the incoming data,” it said.
“And crucially there is only one (jobs data) release before the next (policy) meeting on October 29-30,” it said.
The news also boosted higher-yielding, riskier currencies in emerging markets, which suffered heavy selling in August as foreign investors fled to the United States expecting interest rates there to rise.
The dollar slipped to 11,078 Indonesian rupiah from 11,290 rupiah on Wednesday afternoon in Asia, although it is still sitting around four-year highs.
It also weakened to 1,071 South Korean won from 1,082 won and to 31.00 Thai baht from 31.26 baht.
“Risk assets are set to stage a strong comeback after the Fed surprisingly left its asset purchase size unchanged,” Credit Agricole said.
“Asian currencies should strengthen, on the back of the weak dollar, and the reduced worries over capital outflows.” - AFP