Since Tuesday, the US dollar fell across the board after the Federal Reserve cut interest rates in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus.
The Central Bank said it was cutting rates by a half percentage point to a target range of 1.00% to 1.25%.
“The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate,” the Fed said a statement.
The dollar index, which measures the greenback’s strength against a basket of six other major currencies, was 0.14 % lower, after falling 0.555% to 96.991 earlier in the session. The index slipped to fresh 6-week low of 96.926 after the interest rate decision before paring losses.
“This is definitely not good for the dollar,” said Mark McCormick, global head of FX strategy at TD Securities. While the US has room to cut interest rates, other developed economies have already slashed rates to record lows and may be hesitant to reduce them further. That is likely to weigh on the US currency and boost the currencies of other countries, he said.