Dollar gains as US interest rates hold steady

THE dollar erased some of its losses against the European single currency yesterday, at $1.22 to the euro, after falling as low as $1.2276 earlier, for a new record.

Meanwhile the US Federal Reserve held interest rates at 45-year lows yesterday as policy-makers renewed a vow to keep borrowing costs down for a long time while still saying the threat of falling prices had eased.

The rate-setting Federal Open Market Committee said the chance of an unwelcome drop in inflation was now almost equal to the possibility price pressures could pick up.