The forex market remains turbulent due to the economic downfall caused by the pandemic. The U.S. dollar began rising against the major currencies on Thursday. Investors are moving on the cash because of wild financial market volatility, worrying over tightening liquidity.
Investors are trading everything they can to keep their money in dollars as the epidemic threatens to paralyze large swathes of the global economy. Junichi Ishikawa, the senior foreign-exchange strategist at IG Securities in Tokyo, stated that this is similar to what happened during the global financial crisis in that investors are even selling what are typically considered safe-haven assets.
Ishikawa also added that investor uncertainty is about as high as it can get. They buy the dollar, thinking that the biggest hedge against risk is holding money in cash.
As a result, the currency jumped by 0.8% against the pound to $1.1528, approaching the strongest point since at least 1985. The rush into dollars left no currency unscathed. The greenback rose by 3% to an 11-year high against the New Zealand dollar. And it climbed up more than 3% versus the Australian dollar to a 17-year high.
Meanwhile, the Reserve Bank of Australia cut interest rates on Thursday after an out-of-schedule policy meeting. Even though major central banks have taken steps this week to increase the dollar’s liquidity, it has done little to slow the dollar’s gains so far. The currency also increased by 0.65% to 108.76 against the yen.
What about the Euro and Sterling?
The sterling tumbled down near to its lowest point since at least 1985 against the U.S. dollar. On the other hand, the euro rose briefly versus the dollar and the pound after the European Central Bank announced a 750 billion euro asset-purchase program in response to the coronavirus outbreak.
The New Zealand dollar dropped to an 11-year low as investors dumped riskier assets. The Australian dollar also fell to a 17-year low.
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