2023.03.2221:29:00UTC+00Dollar Loses Ground Against Major Counterparts After Fed Rate Decision

The U.S. dollar drifted lower on Wednesday as the Federal Reserve raised interest rate by 25 basis points and projected just one more rate hike this year.

The Fed also said additional policy firming may be appropriate, although that marks a shift from saying ongoing increases in rates will be appropriate.

The central bank's latest projections suggest the Fed plans to raise rates just one more time this year to a range of 5.0 to 5.25%.

In its statement, the Fed described the U.S. banking system as "sound and resilient" despite the recent failures of Silicon Valley Bank and Signature Bank.

The Fed acknowledged recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation but noted the extent of these effects is uncertain.

The dollar index dropped to 102.07 after the central bank announced its policy. Despite recovering to 102.52, the index still remains firmly down in negative territory, netting a loss of about 0.7%.

Against the Euro, the dollar has weakened to 1.10857 from 1.0771.

The dollar is trading at 1.2266 against Pound Sterling. recovering from 1.2335.

Against the Japanese currency, the dollar is weak, fetching 131.37 yen a unit, compared with 132.49 yen on Tuesday.

The dollar is down marginally against the Aussie, at 0.6678. Against Swiss franc, the dollar weakened to CHF 0.9175.

The dollar is up slightly against the loonie at 1.3732, after settling at 1.3714 on Wednesday evening.