U.S Dollar Weakens as Hurricane, ECB’s Tapering Sign

Photo : Special

JAKARTA (TheInsiderStories) – The United States Dollar (US$) currency is down against all major currencies, its weakness exacerbated by the strengthening of the Euro.

This has also exerted an effect on the Rupiah, the Indonesian currency, rupiah, as it strengthened 83 points or 0.62 percent on opening today, while the US$ was at Rp 13,224.

As reported by Reuters on Friday (8/9), the US dollar is sinking because long-term Treasury yields fell to their lowest in 10 months, after announcement of U.S. jobless claims data.

In addition there are concerns about the impact of hurricanes Irma and Harvey, and how they will affect the world’s largest economy. Thus a rise in the demand for safe-haven instruments, like government bonds.

The dollar index against six major currencies previously stabilized at 91,480, slipping now to 91,405, its lowest since January 2015. The weakness of the USD dollar was clouded by a European Central Bank (ECB) decision to keep its key rate at the lowest level.  The ECB also lowered inflation expectations.

That boosted the Euro rise, by 0.05 percent to $1.2027. This gain is approaching the peak of the Euro highest position over a 2.5-year period, at $1.2070.

ECB President Mario Draghi spoke in Frankfurt on Thursday, following an ECB Governing Councils meeting, which saw the group discuss the current state of monetary policy in the Euro zone.

During the press conference afterwards, Draghi and fellow ECB officials spoke about the timing of a possible exit from the banks ultra-loose monetary policy program, as well as commenting on overall strategy.

“We expect rates to remain at present levels for an extended period of time, and well past the horizon of our net asset purchases. Very substantial degree of accommodation is still needed for underlying inflation
pressures to build up and support headline inflation,” Draghi explained.

Meanwhile in Asia, MSCI broadest index of Asia-Pacific shares outside Japan added 0.1 per cent, but was still down 0.2 per cent for the week. Japan’s Nikkei stock index was pressured by a stronger yen, slipping 0.5 per cent, thus losing 2 per cent for the week.

Writing by Elisa Valenta, Email : elisa.valenta@theinsiderstories.com