Dollar Rises on Safety Haven Demand After Fed Meeting

The dollar rose against major currencies on Wednesday after the U.S. Federal Reserve said the economy will remain weak even as the pace of decline has slowed.

On its two-day monetary policy meeting, the Fed decided to leave its key rate unchanged at a record low level of zero to 0.25 percent, in line with expectations.

The central bank said in a statement released after the meeting that information received since its April meeting suggests that the pace of economic contraction is slowing.

Conditions in financial markets have generally improved in recent months and household spending has shown further signs of stabilizing, according to the statement. However, the Fed said "economic activity is likely to remain weak for a time" and "inflation will remain subdued for some time."

The Fed pledged to "employ all available tools to promote economic recovery and to preserve price stability." But it didn't signal any major change in its unconventional monetary policy measures.

It implied that Fed decision makers think the U.S. economy is not recovering strongly enough, analysts said. Investors were disappointed about the statement, driving money back into U.S. dollar for safety.

The euro bought 1.3921 dollars in late New York trading compared with 1.4083 dollars it bought late Tuesday. The pound fell to 1.6411 dollars from 1.6454 dollars.

The dollar rose to 1.1520 Canadian dollars from 1.1516 Canadian dollars, and rose to 1.0993 Swiss francs from 1.0671 Swiss francs. It rose to 95.77 Japanese yen from 95.26 Japanese yen.