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US dollar set for biggest winning streak in 28 years
THE dollar extended its gains against its peers on Thursday, putting it on its biggest rising run since 1992, as demand for funding stayed high despite the recent burst of liquidity injection operations undertaken by central banks around the world.
Sterling teetered near its lowest point against the greenback since at least 1985. The Australian dollar tumbled to a 17-year low, and the New Zealand dollar was at its weakest in 11 years as investors dumped riskier assets.
Even the euro, which briefly gained after the European Central Bank (ECB) announced a 750-billion euro (S$1.17 trillion) asset-purchase programme in response to the novel coronavirus outbreak, turned lower in early London trading, heading towards a three-year low of US$1.0778 hit last month.
"Central banks are stepping up their liquidity actions, but it is not enough to make sure the dollar scarcity disappears and as a result, the dollar continues to be the favoured currency across the board," said currency strategist Manuel Oliveri of Credit Agricole in London.
The ECB's purchase scheme, announced after an emergency meeting late on Wednesday, came less than a week after policymakers launched fresh stimulus measures.
Against its rivals, the dollar firmed to 101.81, its highest level since March 2017. It has gained more than 7 per cent in the past nine trading sessions.
On an eight-day rolling basis, it is on its biggest rise since September 1992.
Though global central banks have pumped in billions of dollars in emergency liquidity injections in recent days and strengthened swop lines, dollar funding pressures remained exacerbated across the board.
Investors are selling what they can to keep their money in dollars due to the unprecedented amount of uncertainty caused by the epidemic, which threatens to paralyse swathes of the global economy.
Kit Juckes, a strategist at Societe Generale in London, said that though there has been an improvement in the front end of the dollar liquidity curve, longer-tenor funding in some corners of the market remained high.
The broad rush for dollars has forced investors to unload Treasuries and other government bonds as well as gold in order to keep their money in cash dollars.
This has confounded many analysts, as investors normally buy government debt and precious metals during times of uncertainty. REUTERS