Dollar slides after short-lived boost as Bernanke says Fed will monitor sliding dollar

Dollar slides after Bernanke pledges to hold rates

NEW YORK — The dollar dropped Monday after Federal Reserve Chairman Ben Bernanke pledged anew to keep interest rates at record-lows to nurture the economic recovery, but said the central bank will monitor the sliding U.S. dollar.

Higher interest rates can support a currency as investors transfer funds in search of better returns. Earlier this month, the ECB and BoE maintained their rates at 1 percent and 0.5 percent, respectively, higher than the Fed’s current rock-bottom range near zero.

Bernanke’s rare remarks about the greenback gave a short-lived boost to the dollar. The 16-nation euro slid to $1.4878, later spiking above the psychologically significant $1.50 mark. The euro bought $1.4987 in late afternoon trading in New York, compared with $1.4893 Friday.

The British pound jumped to $1.6836 from $1.6672, after trading as low as $1.666 after Bernanke’s comments. The dollar fell to 88.98 Japanese yen from 89.63 yen.

In remarks to the Economic Club of New York, Bernanke tried to bolster confidence in the dollar without actually raising rates. Economists expect the Fed will hold rates near zero at its next meeting on Dec. 15-16 and into part of next year to help the recovery gain traction.

“It is clear from the Chairman’s remarks that the dollar’s decline is not of sufficient proportions to prompt a change in the U.S. monetary policy,” Brown Brothers Harriman analyst Marc Chandler wrote in a research note.

Also Monday, the Commerce Department said retail sales rose more than expected in October due largely to a big rebound in auto sales.

The dollar tends to lose value as a result of better-than-expected economic reports as investors pursue riskier, high-yielding assets in other countries.

In other late trading Monday, the dollar fell to 1.0068 Swiss francs from 1.0135 late Friday, and edged down to 1.0467 Canadian dollars from 1.0517.