© Reuters. US dollar banknotes in an illustration from Reuters archives.
SINGAPORE (Reuters) – The dollar suffered heavy losses on Thursday and is on track to record an annual decline after two years of strong gains, with markets affected by expectations of the Federal Reserve (US central bank) cutting interest rates next year.
As the year draws to a close, there is expected to be little liquidity and limited movements until the new year.
The measure, which measures the US currency against six rival currencies, fell to a five-month low of 100.81. The index fell 0.5 percent yesterday, Wednesday, and is heading towards a 2.6 percent decline this year, ending two consecutive years of strong gains.
Investors remain focused on the timing of the Federal Reserve’s interest rate cuts.
The euro increased 0.09 percent to $1.1113, remaining below the highest level in five months at $1.1122 recorded on Wednesday. The consolidated company is heading to achieve annual gains of 3.7 percent, in its strongest performance since 2020.
As for the pound, it reached $1.2813 in the latest trading, its highest level since the tenth of August. Sterling is on track to achieve gains of six percent this year, its strongest performance since 2017.
Investors expect that the Bank of England will not be able to lower interest rates like the US and European Central Banks, given the high inflation in the United Kingdom.
In Asia, it rose 0.23 percent to 141.50 per dollar, approaching the five-month peak of 140.95 it touched earlier this month.
The Asian currency increased by four percent against the dollar in December and is heading for gains for the second month in a row amid growing expectations that the Bank of Japan may soon abandon its ultra-easy monetary policy. Over the course of the year, the yen fell by seven percent against the dollar.
(Prepared by Marwa Gharib for the Arabic Bulletin)
2023-12-28 02:46:00
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