The US Dollar index has surged against the majority of counterparts including the Australian Dollar, South African Rand, Turkish Lira and many more after the US Federal Reserve signalled that it is likely to curb its monetary easing programme, a move that has boosted volatility to its highest level in a year and saw emerging currencies post big losses.
The ‘Greenback’ strengthened against all 16 of its most traded peers after Fed chairman Ben Bernanke outlined the case for the Central Bank to reduce stimulus this year if the US economy continues to improve.
Wednesday’s press conference in Washington DC saw Bernanke outline the reasons for a slowdown to quantitative easing. The Federal Open Market Committee announced that it was leaving the pace of bond purchases unchanged but if the US economy continues to improve in line with its forecasts than an easing will occur.
“If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would b appropriate to moderate the pace of purchases later this year, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year 2014,” Bernanke said at the press conference.
Emerging currencies were particularly affected as investors worried that any easing would result in a decline of Dollar flows into the respective economies. India led the way as the nation to post the biggest decline against the US Dollar. The Indian Central Bank has been forced to intervene to protect the Rupee.
“QE3 is now likely to end in the middle of next year so we’ve had an initial rise in the dollar,” said a currency strategist at National Australia Bank Ltd. in London, referring to quantitative easing, or QE. “People are reading this as the end the cheap money that’s gone into emerging markets from the U.S. and Europe. If today’s U.S. data is reasonable, the Dollar will continue to rally against currencies like the Aussie in particular.”
US Dollar (USD) Current Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6475
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7562
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0881
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 98.0791
The US Dollar/Canadian Dollar Exchange Rate is currently in the region of: 1.0341
(Correct as of 14:25 pm GMT)
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