When the Fed closes the door on its latest stimulus, will that lift pressure on the battered dollar and jumpstart a sustained recovery for the greenback?
Well, probably not.
The Fed initiated its $600 billionbond-buying program, known as QE2, in November as a way to stimulate the economy while keeping interest rates low and spurring more lending and spending.
The Fed haters, of which there are many, saw it slightly differently. They worried QE2 would keep long-term interest rates too low for too long and further weaken the already puny dollar.
Now, the end of QE2 might lift some of the downward pressure on the dollar. But probably not enough to spark a swift appreciation.
“With QE2 ending, maybe that downward pressure subsides a little bit,” said John Derrick, director of research for U.S. Global Investors San Antonio. “But the Fed really isn’t reversing course.”