Mar 25 2024: The dollar experienced a decline on Monday, influenced by the potential for currency intervention from Japanese authorities and a government-led rally in China’s yuan, which put pressure on the U.S. currency.
The Japanese yen showed slight gains, reaching 151.29 per dollar after hitting a four-month low of 151.86 last week. Japanese officials expressed concerns about the yen’s weakening, stating that it does not align with economic fundamentals. This sentiment, coupled with the Bank of Japan’s recent interest rate hike, has contributed to the yen’s strength, although traders anticipate low rates to persist, maintaining a significant interest rate gap favoring the dollar.
The dollar index decreased by 0.1% to 104.35, following a nearly 1% weekly gain. Meanwhile, the Chinese yuan emerged as a notable mover in the forex markets, rising around 0.3% in onshore trading to 7.21 per dollar. Chinese state-owned banks were observed selling dollars for yuan, reversing a previous decline.
European currencies also made modest gains, recovering from last week’s losses attributed to dollar buying amid expectations that the Federal Reserve would delay rate cuts compared to other central banks. Speculation for rate cuts by the European Central Bank and the Bank of England has increased, with the Swiss National Bank’s recent rate cut adding to these expectations.
The euro climbed 0.1% to $1.0818, rebounding from a three-week low, while sterling rose 0.08% to $1.2611 after a more than 1% decline last week. Additionally, the Australian dollar advanced by 0.21% to $0.6528.
Bitcoin experienced a 5.6% increase to $67,030, recovering from a recent drop but remaining below its record high above $73,800 reached on March 14.