Dollar trades flat in early trade

24 Mar 2023 , 09:21 AM

The dollar held firm on Friday at seven-week lows as traders took in the Federal Reserve’s indication of a pause in interest rate hikes as investors remained wary due to concerns over the banking sector.

The dollar index, which compares the value of the dollar to six important rival currencies, decreased 0.019% to 102.56, barely 0.019% higher than the seven-week low of 101.91 it reached on Thursday. The index eked out a small gain on Thursday, its first in six trading days.

The Fed on Wednesday raised interest rates by 25 basis points, as expected, but took a cautious stance on outlook because of banking sector turmoil.

In an effort to assuage investor concerns, U.S. Treasury Secretary Janet Yellen underlined on Thursday that she was prepared to take more steps to guarantee that Americans’ bank accounts remained safe.

With the abrupt bankruptcies of two U.S. lenders and the emergency sale of troubled Swiss bank Credit Suisse to competitor UBS, banking stocks have taken a beating over the past two weeks.

Having earlier in the session reached a six-week high of 130.28 per dollar, the yen gained 0.34% to 130.37. Data released on Friday revealed that while Japan’s core consumer inflation fell in February, an index that excludes energy costs reached a four-decade high.

Analysts predict that the data will maintain market expectations of a short-term adjustment to the Bank of Japan’s bond yield control policy because inflation is still above the central bank’s 2% objective.

The euro dropped 0.03% to $1.0827, reversing Thursday’s seven-week high of $1.0930. The last price of sterling was $1.2275, down 0.08% from the previous day.

The kiwi dropped 0.22% to $0.623, while the Australian dollar dropped 0.31% to $0.666.

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