The dollar fell today, Friday, after the authorities and banks in the United States moved to provide support to a troubled bank in order to relieve pressure on the financial system, which restored some confidence to investors.
On Thursday, large US banks pumped $30 billion in deposits into First Republic Bank to save it after it was caught up in the crisis caused by the collapse of two other medium-sized US banks last week.
The bank’s rescue boosted risk appetite around the world on Friday, giving way to risk-sensitive currencies such as the Australian and New Zealand dollars.
And this week brought back to mind the financial crisis that occurred in 2008 when dozens of institutions defaulted on their obligations or obtained billions of dollars in government and central bank rescue packages.
Three US banks received support from regulators and other banks. In Europe, Credit Suisse became the first major global bank to receive emergency support from the Swiss Central Bank since the financial crisis, restoring investor confidence and stopping the bleeding in customer deposits.
The dollar index fell 0.21 percent to 104.07.
The European Central Bank went ahead and raised interest rates by 50 basis points at its monetary policy meeting on Thursday.
In the latest dealings, the euro rose 0.3 percent against the dollar to 1.0646 dollars, and against the pound sterling rose 0.2 percent to 87.75 pence. The euro has been struggling since the beginning of the week to record an increase against the dollar, and lost 0.8 percent against the pound sterling.
Sterling rose 0.12% to $1.2132, while the Swiss franc rose 0.35%.
The Japanese yen also rose, which also tends to benefit from times of volatility and stress. It increased in the latest transactions by 0.5 percent to 133.13 per dollar, and is heading to record a weekly rise of one percent.
The Australian dollar, which usually performs well in times of investor optimism, jumped 0.8% to $0.6707, while the New Zealand dollar rose 0.9% to $0.625.
