The dollar fell dramatically against other currencies yesterday as experts predicted an end to the sustained interest rate increases witnessed in the last year.

This morning the dollar stood at 1.7710 to the pound and 1.2018 against the euro.

Despite the Federal Reserve's decision to raise interest rates by 0.25 per cent to 4.25 per cent this week, many believe that the new wording of the Fed's policy statement hints at future stability.

References to "policy accommodation" have gone from the statement, suggesting to some analysts that the need to steer the US economy with rate rises has dwindled.

"The change in the wording raised expectations that the US Fed will end interest rate hikes," Sumitomo Trust and Banking customer dealer Norihiro Takemura told Forbes.

However, the statement did allude to the likely need for "further measured policy firming", which some have interpreted as an indication of a 0.25 per cent increase at the next meeting.

The Federal Reserve's governors are set to meet again on January 31st.