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Dollar Falls Most Since 2011

ECBs efforts to protect euro and Federal Reserves bond buying undermine U.S. currency.

By John Detrixhe, Bloomberg | Updated on October 01, 2012

The Dollar Index fell by the most since the first quarter of 2011 after the European Central Bank pledged to protect the euro from unraveling and the Federal Reserve committed to reduce unemployment via open-ended debt buying, which may debase the U.S. currency.

Since July 26, when ECB President Mario Draghi said he would do “whatever it takes” to save the euro, the 17-nation currency rose versus 15 of its 16 most-traded counterparts tracked by Bloomberg. Amid the Fed’s expansion of monetary stimulus, the Dollar Index lost 2.1 percent in the third quarter. The Bank of Japan, which followed the Fed and the ECB in expanding its balance sheet by 10 trillion yen ($130 billion), is scheduled to announce its next policy decision on Oct. 5.

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