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LONDON. – The dollar advanced from the weakest level in four weeks against the yen amid speculation Federal Reserve policy makers will remove their pledge to keep borrowing costs low for a considerable period in their statement today. The greenback pared gains as the cost of living in the US fell in November by the most in almost six years before the central bank’s 2 pm decision.

Russia’s rouble snapped a seven-day drop as the finance ministry said it was selling reserves to counter a plunge that sent the currency to a record.

New Zealand’s dollar fell the most in more than a week after the current-account deficit widened.

“We think today’s decision will be a positive for the dollar,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said by phone.

The Fed will be moving incrementally towards a more hawkish position. The dollar gained 0,6 percent to 117,09 yen at 8:51 am New York time after depreciating to 115,57 yesterday, the weakest since November 17. The US currency strengthened 0,3 percent to $1,2472 per euro. The yen fell 0,3 percent to 146,05 per euro after gaining 1,6 percent in the previous two days.

The Bloomberg Dollar Spot Index, which tracks the US currency against 10 trading partners, gained 0,3 percent to 1, 113. It closed at 1,122 on December 5, the highest level since March 2009. JPMorgan Chase & Co’s Global FX Volatility Index reached 10,06 percent, the highest level since September 2013. It has climbed from a record-low 5,28 percent set on July 4.

Dollar Advance

The dollar trimmed its advance as the consumer-price index dropped 0,3 percent, the most since December 2008, after being little changed the prior month, a Labour Department report showed yesterday in Washington. The median forecast of 84 economists surveyed by Bloomberg called for a 0,1 percent fall.

Persistently low inflation allows Fed policy makers to exercise patience in raising the benchmark interest rates that they’ve held near zero since 2008 to spur growth and trim unemployment.

“Plunging fuel costs also will free up money that households can spend on other goods and services, bolstering the economic expansion Pretty much everyone expects the ‘considerable time’ phrase to go. Our bias would be that we go into the meeting with the market still with a large overhang of long-dollar positions and, if anything, the risk is therefore disappointment.”

A long position is a bet an asset’s price will rise.

The rouble lost 4,7 percent yesterday after weakening more than 19 percent in the biggest one-day slump in 16 years as Russia’s central bank unexpectedly raised its key interest rate to 17 percent from 10,5 percent.

Rouble Panic

The rouble rose 1,9 percent today to 66,22 per dollar after depreciating to a record 80,10 yesterday. I certainly heard a level of 100 being spoken about yesterday,” Phyllis Papadavid, a senior foreign-exchange strategist at BNP Paribas SA in London, said in an interview on Bloomberg Television’s “Countdown” with Mark Barton and Anna Edwards.

“If we see the currency weakening and we see oil prices continue at these levels, it will feed through to further instability in the rouble unfortunately.”

Crude oil futures fell as much as 3,1 percent and traded at $54,77 a barrel after sliding below $54 yesterday for the first time since May 2009. The United Arab Emirates said the Organisation of Petroleum Exporting Countries won’t cut production even if prices fall as low as $40 a barrel.

Oil Play

Norway’s kroner slid 0,1 percent to 7,4338 per dollar after declining to 7,8745 yesterday, the weakest since June 2002. The kroner is clearly the market’s chosen way to play oil prices at the moment. “Ultimately we’ll find a base and the story through 2015 will be one of gentle recovery in oil prices, but I’m not sure I’d want to express that view in these illiquid December markets.”

New Zealand’s dollar dropped for the third time in four days after Statistics New Zealand said the current-account deficit expanded to NZ$5,01 billion ,in the third quarter, the widest since 2008. The kiwi fell 0,6 percent to 77,52 US cents, the biggest decline since December 8. Australia’s dollar weakened 0,3 percent to 81,91 US cents after declining to 81,40, the lowest since June 2010. – Bloomberg.