By Neil Shah
NEW YORK -(Dow Jones)- Investors are bracing for bigger currency swings after Federal Reserve officials signaled they won't do more to help the sluggish U.S. economy, judging from bets in the foreign-exchange derivatives market.
On Thursday, a gauge of expected volatility in the options market rose for many major and emerging-nation currencies. A widely-watched measure of bearish bets on the euro, called the "risk reversal," hit 2.75 from 2.55 a day earlier. That's near its 2.85 peak in late 2008 after Lehman Brothers Holdings Inc.'s collapse sparked a global economic crisis.
Federal Reserve Chairman Ben Bernanke's comments on Wednesday "spooked the market," says Ashwath Venkataraman, global head of emerging-market foreign- exchange options at HSBC Holdings PLC in London. Bernanke indicated Fed officials aren't planning new steps to pump money into the financial system even though the U.S. recovery remains weak.
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