Dollar holds stable as concerns over the financial crisis persist
On Monday, the dollar maintained its stability. The yen held steady near its peak of the last seven weeks while investors weighed the measures implemented by authorities and regulators to quell worries about the global financial system.
The dollar index, measuring the dollar’s worth in comparison to six other trading currencies, surged by 0.078% to 103.07 today following a 0.5% rise on Friday due to mounting financial worries, with Deutsche Bank’s stock prices plunging by 9%.
In the wake of the abrupt failure of two U.S. lenders and the last week’s rescue of the troubled Swiss bank Credit Suisse, regulators intervened to calm investors’ worries, battering global banking equities throughout the month.
The Federal Deposit Insurance Corporation announced on Monday that First Citizens BancShares Inc. would buy all of the deposits and loans it holds on behalf of Silicon Valley Bank. On Friday, the U.S. Financial Stability Oversight Council stated that despite pressure on some institutions, the U.S. banking sector remained “strong and robust.” But investors continue to be cautious.
The yen reached a seven-week high against the dollar on Friday thanks to risk-averse investors, and it was expected to gain 4% in March. On Monday, it was last at 130.75.
Fed increased interest rates
In line with expectations, the Fed increased interest rates by 25 basis points on Wednesday. But, due to recent financial instability, the Fed adopted a cautious approach to the forecast. According to the CME FedWatch tool, the likelihood that the Fed will keep interest rates the same at its upcoming May gathering is estimated to be above 80%, with markets forecasting a decrease as soon as July.
Chandler stated, “The Fed funds futures are pricing in dramatic easing in the coming months, contrary to the unambiguous signal from Powell.” He continued, “This is really aggressive and goes beyond the realm of possibility.”
Neel Kashkari, president of the Minneapolis Fed, stated on Sunday that the recent stress in the banking industry and the potential for a secondary credit crunch had taken the United States closer to recession.
- The euro was up 0.05% to $1.0764 in the meantime, following a 0.6% decline on Friday.
- After falling by 0.5% on Friday, the pound was trading at $1.2235, up 0.05% on the day.
- The Australian dollar increased by 0.09% to $0.665.
- The kiwi was up 0.03% at $0.620.
In the crypto sector:
- Bitcoin last increased 0.84% to $27,861.02.
Ethereum increased by 0.71% to $1,763.39.