Dollar falls as relief rally pushes risky currencies higher
(Extended version of the text, updated citations)
SINGAPORE, March 17 (Reuters) – The dollar fell on Friday after governments and banks took steps to ease strain on the financial system, easing most of the major currencies that fell this week due to turmoil in the banking sector.
The dollar index against a basket of six major currencies fell 0.46% at 10:05 Moscow time to 103.934.
Steps to rescue U.S. regional First Republic Bank on Thursday boosted risk appetite around the world on Friday as fears of a global banking crisis subsided. This led to an increase in the value of the Australian and New Zealand dollars.
The Australian was up 0.99% to $0.672 and the New Zealand dollar was up 0.95% to $0.6254.
Major US banks on Thursday injected $30 billion into deposits at First Republic Bank to bail out a lender caught in the midst of a deepening crisis following the collapse of two US financial institutions last week.
A day earlier, Credit Suisse announced it would borrow $54 billion from the Swiss central bank to boost liquidity and investor confidence after the lender’s share price plunge fueled fears of a possible global banking crisis.
Even as the market slump heightened concerns about the health of European banks, the ECB agreed at Thursday’s meeting to a substantial 50 basis point rate hike.
The euro was up 0.57% to $1.0665 while sterling was up 0.53% to $1.2171.
“In our view, market volatility this week is not rooted in the banking crisis, but rather indicative of financial ruptures resulting from the fastest monetary tightening since the early 1980s.” – said the analysts of the BlackRock Investment Institute.
The March meeting of the Federal Reserve System is in the spotlight. Some investors are hoping the Fed can slow down its aggressive rate hike campaign to ease the strain on the financial sector.
The Japanese yen rose 0.63% against the dollar to 132.88.
The Swiss franc rose 0.43% to $0.9251. Paired with the euro, the currency was inactive near 0.9867.
The mainland yuan rose 0.38% to 6.8705 and the offshore yuan rose 0.36% to 6.869.
Bitcoin was up 4.09% to $26,074 and Ethereum was up 2.68% to $1,721.9.
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