The U.S. dollar hit a high in March, rallying due to the investors trying to hoard as much cash as they can. They bought the world’s most liquid currency because it was also considered a safe haven. However, trillions of dollars worth of stimulus efforts by the authorities and central banks helped ease massive sell-offs in global markets.
Furthermore, there were big government spending pledges, a $2.2 trillion U.S. package being among them. Central banks coordinated efforts around the globe to increase the supply of greenbacks. These measures, combined with an unprecedented high rate of U.S. jobless claims on Thursday, which underscored the coronavirus’s impact on the country’s economy, caused the U.S. dollar to fall.
Analysts at MUFG stated that the sharp reversal of the U.S. dollar on Thursday was clear evidence that the deluge of measures from the Fed to address dollar liquidity problems was finally becoming more successful.
According to experts, the dollar will continue declining after this crisis. However, they also noted that the investors need to wait and see if a trend of USD weakness becomes established.
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What about the other currencies?
Other major currencies rallied after the authorities, and central banks’ efforts caused the U.S. currency’s fall. The euro slid down by 0.2% to $1.10080, but it still gained almost 3% over the dollar last week. Against the yen, the dollar dropped down by 0.7% to 108.855 yen on Friday.
The U.S. currency was almost steady against the Australian dollar and the sterling as they consolidated the week’s gains. However, the dollar increased by more than 1% against the export-exposed South African rand and Norwegian crown.
While the greenback managed to edge up by 0.2% against major currencies later on Friday, the currency was still down by almost 3% last week. That is its biggest decline since May 2009.