The dollar fell on Monday on growing expectations that the Federal Reserve will be less aggressive on monetary policy after policymakers intervened to limit the fallout from Silicon Valley Bank’s sudden failure.
The U.S. government announced several measures early in the session in Asia, saying all SVB customers will have access to their deposits starting Monday.
Authorities also said depositors at New York’s Signature Bank, shut down Sunday by New York’s financial regulator, would be compensated without loss to the taxpayer.
The Federal Reserve announced it would make additional funds available through a new Term Bank Financing Program, which would offer loans of up to one year to depository institutions, backed by Treasuries and other assets held by these institutions.
Market turmoil in the wake of the SVB crash led investors to speculate that the Fed will not raise interest rates by 50 basis points this month. Attention will now turn to Tuesday’s inflation data to gauge the Fed’s tone.
*The Dollar Index, which measures the U.S. currency’s performance against six other currencies, fell 0.55% to 103.67, near one-month lows, after Goldman Sachs (NYSE:GS) said it no longer expects the Federal Reserve to raise rates at its March 22 meeting. Subsequently, the index traded at 103.92.
The euro rose 0.67 percent to $1.0704, close to a one-month high of $1.0737 earlier in anticipation of Thursday’s European Central Bank policy meeting.
The yen rose 0.8 percent to 133.88 per U.S. dollar after hitting a one-month high of 133.58 at the start of the session, while the greenback fell 0.6 percent against the Swiss franc to 0.9155 per dollar and sterling rose 0.57 percent to $1.2105.