Dollar Declines Ahead Of Fed Statement On Rates

NEW YORK (AP) — The dollar declined ahead of an expected announcement from the Federal Reserve this afternoon that interest rates are likely to remain near zero.

Higher interest rates can support a currency as investors transfer funds in search of better returns.

In midday trading Wednesday, the 16-nation euro rose to $1.4836 from $1.4702 late Tuesday, while the British pound gained to $1.6569 from $1.6402. Meanwhile, the dollar climbed to 90.91 Japanese yen from 90.32 yen.

The Bank of England and European Central Bank make announcements on Thursday. Economists expect the ECB to hold its key interest rate at 1 percent, while the U.K.'s central bank is expected to keep rates at 0.5 percent for an eighth straight month.

Traders have lately been borrowing the low-yielding dollar to buy assets that give better returns, a market play called a "carry trade." That keeps the value of the buck lower, as such trade weighed down the yen earlier this decade.

If the Fed later this afternoon makes any changes in language in its statement that the market interprets as a signal of intent to hike interest rates sooner than summer 2010, that could fuel the greenback.