The Chinese Yuan rose slightly after the dollar fell again. The yuan traded at 7.0131 per dollar in the offshore market, as bulls awaited key Chinese economic data. China planned to release several important economic indicators that should reveal the scale of damage caused by the coronavirus late on Monday.
Meanwhile, the Reserve Bank of Australia added $5.9 billion to the banking system through market repo operations, while the Reserve Bank of New Zealand made a cut of 75 basis points to its rates. The Australian dollar dropped by 0.38% to $0.6164, with the New Zealand dollar declining by 0.2% to $0.6045 during the last days.
What caused the U.S. dollar’s fall?
The dollar plummeted down against several other currencies on Monday after the U.S. Federal Reserve made another surprise interest rate cut. It lowered by 1.5% to 106.35 yen early on Monday in reaction to the Fed’s move.
Against the euro, the greenback fell by 0.3% to $1.1153, and it slid by 0.3% to 0.9507 against the Swiss franc. The currency also declined by 0.9% to $1.2405 per British pound.
Six central banks cut pricing on their swap lines recently around the globe. The Fed cut rates on Sunday to a target range of 0% to 0.25%, saying that it would expand its balance sheet by at least $700 billion in the coming weeks. It wanted to make the process of providing dollars to financial institutions facing stress in credit markets easier.
The recent drop is a mildly negative reaction for the U.S. dollar – noted Ray Attrill, head of FX strategy at National Australia Bank in Sydney. He also added that the Fed moved a little sooner and a little more aggressively than some analysts thought.
According to the expert, this step cannot prevent economic fallout due to social distancing. That will require investments from the government and some fiscal spending.