Dollar advances after Bernanke suggests Fed will rates when time comes

NEW YORK — The dollar rose against most major currencies Friday after Federal Reserve Chairman Ben Bernanke reassured markets that the U.S. central bank will wind down its extraordinary stimulus measures when the time is right.

Some investors interpreted Bernanke's comments as a sign the Fed might raise interest rates sooner than expected, which would boost the dollar versus other currencies as better yields make it more attractive to investors. The comments Thursday night came after European Central Bank and the Bank of England both left interest rates unchanged and indicated that rates would not increase in the near future.

In other news, official data in Germany, Europe's largest economy, showed consumer prices declined somewhat in September, as did exports during the month of August.

The 16-nation euro slipped to $1.4709 in late New York trading, down from the $1.4778 late Thursday. That's slightly below a 12-month high of $1.4803.

The British pound fell to $1.5835 from $1.6067, while the dollar advanced to 89.84 Japanese yen from 88.52 yen late Thursday.

Bernanke said U.S. rates will probably stay near a record low for an "extended period."

"At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road," Bernanke said.

He laid out some details on how the Fed would sop up extra liquidity in the economy.

The comments boosted the dollar as it calmed fears that the Fed will be unable to control the monetary stimulus — and associated inflation risks — it has unleashed.

The dollar has slid against other currencies this year but on Friday, the ICE Futures U.S. dollar index, which tracks the dollar against a basket of other currencies, rose 0.7 percent.

On Thursday, both the ECB and the BoE left interest rates unchanged at record lows of 1 percent and 0.5 percent and signaled they will probably hold rates steady for some time.

ECB president Jean-Claude Trichet said that while the worst of the recession has probably passed, it was not time to signal victory.

"We have signs of stabilization. We are out of the free-fall," Trichet said Thursday. "We have to be cautious. We have to be prudent."

He said the ECB continues to monitor currency markets closely and added that excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.

In other late trading Friday, the greenback fell to 1.0441 Canadian dollars from 1.0516 on news Canada's unemployment rate fell to 8.4 percent in September, the first decline in almost a year. Statistics Canada reported that the country added 30,600 jobs last month, several times more than economists expected. It was the second consecutive month of employment gains in Canada.

The dollar rose to 1.0322 Swiss francs from 1.0272 francs late Thursday.