Investors were alarmed by the downfall of multiple banks, consequently turning to more secure investments during turbulent times for solace.
The dollar index shows the movement of the US dollar against the other six most important world currencies. It slipped in the last seven days by 0.8 percent to 103.86 points. The euro price rose to $1.0670 as the dollar weakened by 0.2 percent against the European currency.
USD exchange rate against the Japanese currency fell 2.3 percent to 131.9 yen.
The dollar experienced strain as a result of Silicon Valley Bank (SVB) and Signature’s collapse, raising apprehension of a recurrence of the financial crisis seen in 2008.
Central banks united against market panic
Some of the world’s biggest central banks rallied on Sunday to prevent a banking crisis from spreading after Swiss authorities ordered UBS to take over rival Credit Suisse in a historic deal backed by a state guarantee.
On Sunday evening following the takeover, the US Federal Reserve, the European Central Bank (ECB), and other significant central banks released statements in an effort to soothe markets jolted by the financial disaster that initiated earlier this month with the fall of two US banks, according to Reuters.
In a global deal not seen since the height of the pandemic, the Fed said it was teaming up with central banks in Canada, England, Japan, Switzerland, and the EU in a coordinated effort to boost market liquidity. The CB has vowed to sustain eurozone banks with loans if required.
Issues are still present within the American banking industry, where stocks of banking corporations remain in a weak state, despite a few of the large banks deciding to pack away $30 billion into First Republic Bank (FRB) subsequent to the failure of Signature and SVB banks that created havoc within the financial system. S&P Global downgraded the FRB’s credit rating, saying deposit inflows may not solve the liquidity problem.