Dollar drops against other leading currencies

Published: 21 Aug at 9 AM Tags: Euro, Dollar,

The US dollar has fallen to its lowest level against the euro in six months on the back of uncertainty about the Federal Reserve’s intentions about pulling in its monetary stimulus policy and a reduction in US Treasury yields. Retreating yields mean that dollar-priced assets become less attractive to investors.

If the Fed does decide to taper its bond-buying policy it will be positive for the dollar. However, mixed economic reports and indecision by Fed leaders has resulted in caution from speculators. Investors are looking for safe-haven bets. This is helping to support the yen.

The dollar index is currently just shy of a previous two-month dip of 80.754 at 80.928. After previously hitting $1.3452, its highest level since 14 February this year, the euro is trading up 0.6 per cent at $1.3417. A dip in the dollar makes the pound, euro, yen and Swiss franc attractive. The Swiss currency is currently trading at a two-month high against the greenback.

The dollar is down 0.3 per cent against the yen at 97.28 yen following a one-week low of 96.88 yen. The Kiwi dollar is also suffering from an announcement by the Reserve Bank of New Zealand that the currency may be overvalued. The Kiwi was down 1.1 per cent at $0.7980.

Emerging market currencies have also been hit with the rupee falling to a record low.