By Yasin Ebrahim
Invesing.com – The dollar rose to its highest level in more than three years on Thursday on higher demand as the dash for cash continued at a time when investors are concerned about potential liquidity issues despite the latest efforts from the Federal Reserve to calm investor fears.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 1.40% to 102.57, its highest since Jan. 2017.
The Federal Reserve said it would expand the currency swap lines – a measure to boost U.S. dollar funding markets – to nine more countries, including central banks in Singapore, South Korea, Brazil, Sweden, Australia, New Zealand, Mexico, Norway and Denmark.
The extension of the currency swap lines are a sensible move by the U.S. central bank, said Sebastien Galy at Nordea Investments.
The pound, meanwhile, remained close to session lows against the dollar after the Bank of England on Thursday slashed rates and expanded its bond-buying program.
The Bank of England’s move would “create the space for the chancellor to announce further measures to help cushion the blow,” ING said.
While the central bank’s action is unlikely to stop a recession, the “hope is that many of these measures can help limit the increase in unemployment, and foster a swifter and smoother recovery when the virus shutdowns have passed,” ING added.
GBP/USD fell 0.51% to $1.556 after hitting a high of $1.1792.
Dollar Hits More Than 3-Year-High Despite Fed Action to Calm Liquidity Fears
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