* Fed chair surprises markets with rate-rise scenario
* Fed trims monthly bond buying to $55 bln
* Yen drops against dollar by more than 1 percent
(New throughout, udpates prices and market activity, adds
By Michael Connor
NEW YORK, March 19 The dollar jumped on
Wednesday as Federal Reserve Chair Janet Yellen surprised world
markets by hinting that the central bank may accelerate the
timetable for ending low U.S. interest rates.
The Japanese yen fell more than 1 percent against the dollar
while the dollar index gained 0.7 percent to 79.38 after
the Federal Reserve ended a two-day meeting by saying it would
push ahead with plans to wind down its bond-buying stimulus.
The central bank also said it will likely need to keep
interest rates low even after the economy recovers given lasting
scars from the financial crisis.
But at a later news conference, Yellen said interest rates
could start rising six months after the anticipated end this
fall of the Fed's bond-buying program, now running at $55
"It's a little bit more hawkish than people expected," said
Shaun Osborne, foreign exchange strategist at TD Securities in
Toronto. "They seem to see interest rates rising sooner rather
than later. ... This is helping the dollar."
Ahead of the Fed policy statement, the dollar had been up
against the yen and the euro but climbed sharply as
The dollar in late New York trade stood at 102.55 yen to the
dollar, up 1.2 percent, and retraced some gains in early
Asian currency trading.
The euro backed away from the $1.40 level it had been
approaching and was at $1.3816 on Wednesday for a decline of
0.83 percent. It, too, reclaimed some losses in Asian trading.
The Swiss franc also dropped against the dollar and
traded off 1.05 percent at 0.8820 francs to the dollar.
Sterling, which had come off a one-month low and
risen as high as $1.6653, was also knocked down by the Fed news
and was off 0.4 percent at $1.6527 in late New York trade.
Sterling had risen with help from British data showing wages
ticking higher and a steadily improving jobs market. The number
of Britons claiming jobless benefits fell more than expected
while wages rose 1.4 percent year-on-year, which though higher
than forecast was still below inflation.
Investors remained cautious over tensions in Ukraine.
Anxiety eased somewhat after Russian President Vladimir Putin
said on Tuesday he did not plan to seize other regions of
Ukraine after Crimean citizens on Sunday voted to be annexed by
(Additional reporting by Anirban Nag in London; Editing by
James Dalgleish and David Gregorio)