The U.S. dollar skyrocketed against major European and Asian currencies on Monday, as well as many emerging market currencies.
Yukio Ishizuki, the FX strategist at Daiwa Securities in Tokyo, noted that investors have moved from risk-off. However, they are now competing with each other for the safety of holding dollars in cash.
According to Ishizuki, there are still many investors who need to sell riskier assets. Additionally, they want to hold their money in dollars. That caused the greenback to hit high against the other currencies.
The coronavirus paralyzed countries and businesses. Investors worry about tightening liquidity and recent declines in global stocks further accelerated their flight to cash. During the last few days, traders have been liquidating positions in safe-havens and other riskier investments to keep their money in dollars.
Some investors hope that big fiscal spending will mitigate the damage to the global economy. But analysts think that uncertainty about the spread of the coronavirus will probably support the U.S. currency in the future.
Even though the major central banks have increased efforts to ease a global dollar funding crunch, the dollar remains in demand so far.
How much did the dollar gain?
The greenback skyrocketed against the euro, reaching the three-year record. But slowed moderately soon and traded a little changing at $1.0707 per euro. It also rose versus sterling toward its highest point since 1985, increasing by 0.45% to $1.1671.
The dollar closed in on multi-year highs against the Australian and New Zealand dollars as the self-isolation economic cost caused the largest intraday to fall down in New Zealand shares.
It approached an 11-year high versus the New Zealand dollar as the country prepared to enter lockdown for the next 48 hours to contain the coronavirus.
However, the dollar traded down by 0.5% at 110.27 against the Japanese yen. But it increased to a record high against the Mexican peso and the Thai baht.