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The Dollar Index fell to its lowest level in more than two years as the U.S. economy expanded in the first quarter at a slower rate than forecast, encouraging the Federal Reserve to keep borrowing costs low.
The U.S. currency fell against the euro and yen after the Commerce Department reported that gross domestic product rose at a 1.8 percent annual pace in the first quarter after a 3.1 percent rate of expansion in the last three months of 2010. The median forecast of economists was for a 2 percent pace of growth.
The yen appreciated versus most of its major counterparts after a report showed Japanese investors sold foreign assets last week.
The yen rallied today as Japanese investors were net sellers of foreign bonds during the week ended April 22. They sold 171.8 billion yen ($2.1 billion) in overseas bonds and notes and 5.6 billion yen in overseas stocks, according to figures based on reports from designated major investors released by the Ministry of Finance in Tokyo. They bought 14.6 billion yen in overseas short-term securities. The total net sale was 162.8 billion yen.
New Zealand’s dollar was one of the worst performers against the greenback after Reserve Bank Governor Alan Bollard called the currency’s recent advance “unwelcome.” The dollar sank a day after Fed Chairman Ben S. Bernanke said he was unsure when monetary stimulus will unwind.
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