The dollar edged lower after major U.S. energy brokers, including the government and banks, dumped a key stake in regional lender First Republic Bank, restoring some confidence to investors.
Thursday’s rescue of the First Republic lifted global risk levels on Friday as worries about global banks eased, paving the way for gains in the Australian and New Zealand dollars. This week has exacerbated the run-up to the 2008 financial crisis.
Credit Suisse became the major global bank since the financial crisis to receive a fast-track bailout from the Swiss central bank, which rehabilitates an investor.
The eurozone banking system is solid, with investors feeling emboldened enough to sell the safe-haven US dollar.
The US dollar index fell 0.3% to 104.3, mainly under pressure from a stronger yen.
At its policy meeting on Thursday, the European Central Bank raised interest rates by a swift 50 basis points. ECB policymakers, with Christine Lagarde at the helm, attempted to ease investors’ concerns that the eurozone’s financial institutions were strong and that, if anything, higher rates would bolster their profits.
Had the ECB refrained from enacting large rate hikes during the present banking crisis, it could have potentially scared off investors and set off a much more dramatic drop in prices.
The euro rose by 0.1% to $1.0619 against the dollar. Meanwhile, the British pound remained unchanged at 87.58 pence.
The sterling advanced 0.18% to $1.214, while the Swiss franc gained 0.1%. Earlier in the week, Switzerland fell by its biggest point against the dollar in a single day since 2015 as the Swiss central bank eased its currency peg.
Japanese Yen Rises
The Japanese yen experienced an increase in its value when the market underwent extreme volatility or pressure. It closed 1% higher at $132.4, recording an increase of over 1% during the week.
On Friday evening, representatives from the Japanese Finance Ministry and the Bank of Japan met to explore the state of financial markets.
The Minister of Finance for International Affairs informed reporters that the government, the central bank, and the banking oversight institution would work together to guarantee the financial system’s stability following a three-way conference.
The Australian dollar advanced 0.52% to $0.6694. Meanwhile, the kiwi gained 0.72% to $0.6242.
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