Dollar appreciates marginally in early trade

27 Mar 2023 , 09:16 AM

On Monday, the dollar held steady as the yen remained close to its seven-week high as investors evaluated the steps taken by authorities and regulators to allay concerns about the global financial system.

The dollar index, which compares the value of the dollar to six other currencies, increased by 0.078% to 103.060 after rising by 0.5% on Friday as financial concerns increased and shares of Deutsche Bank fell by about 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 U.S. Financial Stability Oversight Council stated on Friday that despite pressure on some institutions, the U.S. banking sector remained ‘strong and robust.’ But investors continue to be cautious.

On Friday, risk-averse investors drove the yen to a seven-week high against the dollar of 129.65. On Monday, it was last at 130.70.

In line with expectations, the Fed increased interest rates by 25 basis points on Wednesday. But, because to recent instability in the financial industry, the Fed adopted a cautious approach to the forecast.

According to the CME FedWatch tool, markets anticipate a rate cut as early as July but are pricing in an 87% likelihood that the Fed will keep interest rates unchanged at its next meeting in May.

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 have taken the United States closer to recession.

The euro was up 0.03% to $1.0762 in the meantime, following a 0.6% decline on Friday. After falling by 0.5% on Friday, the pound was trading at $1.2236, up 0.06% on the day.

At $0.665, the Australian dollar increased 0.03% against the US dollar. At $0.620, the kiwi was unchanged.

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