US Dollar Value Stabilizes... Weakens Against Major Currencies

Dollar Index Showing Dollar Value Falls Below 100
US Unemployment Claims Hit Record High Yet Continue to Drop
Reflecting Expectations of Fed Quantitative Easing and US Government Stimulus

[Image source=Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The dollar index, which shows the value of the dollar against major currencies, weakened and fell below 100. Although the number of new unemployment claims in the U.S. surged to an all-time high, it is interpreted that a sense of relief spread in the market.

On the 26th (local time), the dollar index was formed at 99.480, down 1.50% from the previous day. The dollar index had soared from 94.87 on the 9th to 103.605 on the 19th amid market turmoil and increased preference for cash.

Since then, it reversed downward due to aggressive market intervention such as the U.S. Federal Reserve's (Fed) unlimited quantitative easing and fell below the benchmark of 100.

The dollar value also fell 1.42% against the euro and 1.57% against the Japanese yen. It showed a 2.43% weakness against the British pound as well. The decline in the dollar value is read as an example showing that the global dollar liquidity shortage is improving.

The dollar's decline on this day is also interpreted to have been influenced by the U.S. Congress agreeing to pass an emergency economic support bill worth $2.2 trillion for the federal government. Following the Senate, the House of Representatives is also expected to pass the vote on the 27th. U.S. President Donald Trump plans to sign the bill immediately upon arrival.

U.S. Treasury Secretary Steve Mnuchin predicted, "If the bill is enacted, checks will arrive at American households within three weeks." U.S. adults will receive $1,200 in cash from the government.

Jerome Powell, Chair of the U.S. Fed, also appeared unusually on a broadcast that day, saying, "It seems the U.S. economy has entered a recession," but also indicated that "the Fed's ammunition is not lacking," suggesting that there could be additional intervention amid market turmoil, which also appears to have influenced the dollar's value.

However, given the high market volatility, some assessments say it is still too early to be reassured. Bank of America evaluated, "Although the Fed's actions have calmed the market, the COVID-19 crisis is ongoing and economic activities have stopped in many places, so the possibility of additional market turmoil remains."

This content was produced with the assistance of AI translation services.