NEW YORK, March 18 — The dollar fell yesterday as further declines in the shares of Credit Suisse and First Republic Bank rattled markets fearful of contagion and increased concerns that a recession lies ahead because of the impact of tighter monetary policy.
The dollar index, a measure of the dollar against six other currencies, slid 0.604 per cent as traders waited for the Fed’s two-day policy meeting that is expected to end with a one-quarter percentage point hike in interest rates on March 22. “It probably increases the probability that you do have a recession and perhaps it increases the probability that you may have a hard-landing scenario, a more severe recession dynamic,” he said.
Three smaller US lenders, including First Republic, have had regulators and other banks step in to prop them up, while in Europe, Credit Suisse became the first major global bank since the financial crisis to get an emergency lifeline. The Japanese yen, which tends to benefit in times of extreme market volatility or stress, strengthened 1.48 per cent versus the greenback to 131.77 per dollar.
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