The Australian and New Zealand dollars rose as stocks rallied after the Federal Reserve pledged to keep its benchmark interest rate at a record low at least through mid-2013 to support the recovery.
The Aussie dropped earlier below parity with the U.S. currency for the first time since March on concern the world’s largest economy is slowing and the euro region’s sovereign-debt crisis is getting worse. The South Pacific nations’ currencies slid immediately after the Fed’s statement as stocks fell.
“If we can close on a good note, the bottom may be in for risky assets,” said Greg Anderson, a senior currency strategist at Citigroup Inc. in New York. “If that’s the case, currencies like the Aussie should take off here.”
Australia’s dollar advanced 1.5 percent to $1.0336 at 3:50 p.m. in New York, from $1.0187 yesterday. It earlier fell to 99.28 U.S. cents. New Zealand’s dollar appreciated 1.6 percent to 83.42 U.S. cents after weakening to as low as 79.66 U.S. cents, the lowest level since May 25.
The Federal Open Market Committee discussed a range of policy tools to bolster the economy and said it’s “prepared to employ these tools as appropriate,” it said in a statement today in Washington. Three members of the FOMC dissented, preferring to maintain the pledge to keep rates low for an “extended period.”
The Standard & Poor’s 500 Index climbed 3.7 percent after falling 1.6 percent immediately after the Fed’s statement.