New York - The US dollar tumbled on Thursday after the Federal Reserve opted again not to increase interest rates, saying worries about China and the global economy led it to stand pat.
The dollar lost 1.3% against the euro, sinking to $1.1436 per euro, and by smaller amounts against the yen and pound.
While many had expected the Fed to back off on what would be the first rate increase in nine years, the dovishness of comments by Chair Janet Yellen took some by surprise.
Yellen said that besides keeping an eye on the weakening global economy and market turmoil, the Fed would still like to see more signs of tightening in the US labour market.
"We've seen significant outflows of capital from those countries, pressures on their exchange rates and concerns about their performance going forward," Yellen said of the emerging market economies.
"The question is whether or not there might be a risk of a more abrupt slowdown than most analysts expect."
Nick Bennenbroek at Wells Fargo Securities said the Fed's delay in normalizing monetary policy "creates potential for a subdued US dollar performance in the near term."
"However, we still expect the greenback to strengthen over time as the Fed remains on course to raise interest rates."