Around 8:00 p.m. the euro lost 2.03% against the greenback at 1.0689 dollars. It fell to 1.066 dollars, a level more seen since April 2017.
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The euro fell to its lowest level in three years against the dollar on Thursday, with nothing appearing to calm investors’ rush for the greenback.
Around 7:00 p.m. GMT (8:00 p.m. in Paris), the euro lost 2.03% against the greenback, at 1.0689 dollars, after having started the session up. It fell to 1.066 dollars, a level more seen since April 2017.
The British pound, for its part, fell 0.3% against the greenback to 1.1545 dollars. However, it was gaining ground against the European currency, at 92.53 pence for the euro (+ 1.08%).
The previous day, the British currency had collapsed, temporarily losing more than 4% against the dollar and falling to an unprecedented level since 1985.
“The world’s insatiable appetite for the dollar struck again on Thursday, propelling the US currency to its highest level in three years against major currencies,” said Joe Manimbo of Western Union.
Many institutions and businesses have their debt denominated in dollars, which causes a greenback rush. Many investors are also looking to sell securities to get American currency in cash, a safe bet.
“The greenback’s solidity has become a barometer of the fear that the coronavirus will tip the world economy into recession,” added Manimbo.
“The euro was at its highest level in over a year just last week. But the rapid spread of the virus in Italy and Spain, two of the four largest economies in the euro area, has led many people to opt for the security and liquidity of the greenback, “said the specialist.
The European Central Bank has stepped up its efforts to limit the economic fallout from the virus by launching a massive plan to buy bonds worth 750 billion euros.
“Extraordinary times require extraordinary action,” tweeted the president of the Frankfurt institution, Christine Lagarde.
By thus massively redeeming the debt of States and companies of the euro zone on the markets, the ECB hopes to relieve the banks and encourage them to maintain, even revive, their loans to households and businesses, and thus to support production and employment.
The ECB also wants to organize its purchases on the market in a “flexible manner”, which suggests that it could put the accent on certain sovereign securities in great difficulty to ease tensions on their debt, such as for example those of the ‘Italy.
“This is a welcome step but not the end of the story,” said Andrew Kenningham, analyst for Capital Economics.
But that was not enough to make the single currency go up in the long term.
On the pound side “the fall in Bank of England rates, the uncertainty of Brexit and, now, the increasing probability of a (country) closure have hit the British currency hard,” notes Carlo Alberto De Casa, analyst for ActivTrade.
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