Dollar falls to three-week low on inflation worries

The dollar dropped to multi-week lows against the euro and the yen on Wednesday. This came after an increase in the U.S. consumer price gauge failed to prompt wider fears about rising inflation and the Fed’s tapering, pushing down U.S. bond yields. 

The dollar fell 0.2% to 108.80 yen, hitting its weakest level in three weeks. It is down almost 2 percent from a one-year high hit at the end of last month.

The euro rose 0.1% to $1.1960, hitting its strongest level since mid-March. It extended a rally from a five-month trough of $1.1704 hit at the end-March.

The dollar index dropped to as low as 91.724, its weakest since March 22. Against the Swiss franc, the dollar fell to 0.9201, close to its lowest levels in six weeks. 

Elsewhere, the kiwi gained 0.4% to $0.7086 after the Reserve Bank of New Zealand held its interest rate and asset purchase programme steady. 

The Singapore dollar grew 0.25% to $1.3376 against the dollar.