The dollar accelerated slightly against world currencies after the announcement of the expected decision of the US Federal Reserve (Fed) to keep the base rate at 0.00% to 0.25% per annum, according to trading data.
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The euro-dollar exchange rate rose to $1.1818 from the previous close of $1.1722 per euro, and the dollar against the yen fell to 103.66 yen from 104.48 yen. The dollar index (the dollar rate against a basket of currencies of the six countries – the main trading partners of the United States) fell by 0.76%, to 92.7 points.
Prior to the Fed’s decision, the euro rose to $1.1814, and the dollar fell to 103.69 yen per dollar while the dollar index fell by 0.7%.
The decision of keeping the annual base interest rate at the level of 0% to 0.25% was announced by the Fed at the end of the meeting on November 5. The Fed is scheduled to meet again on December 15-16.
Trading data showed that in the initial trading on the day, the global currency get cheaper against other major world currencies because of the lowering demand for reliable assets.
Currency markets have been subject to strong volatility in recent days due to uncertainty surrounding the US presidential election. The elections were held on Tuesday, November 3. The results of the vote in several states are not yet known. According to the calculations of leading American TV channels, the Democratic candidate Joe Biden is leading. At the same time, the incumbent US President Donald Trump is also confident of his victory. Trump on Wednesday night declared his victory and accused the Democrats of trying to “steal the election.” Trump’s campaign is set to demand a recount.
At the same time, many market participants, assessing the prospects of Biden’s presidency, prefer the US currency to other, more risky assets, including the euro.
“Over the last couple of days, the euro has fluctuated back and forth, but in the end it looks like the euro tends to strengthen in a scenario with Biden’s victory,” Nikko Asset Management strategist John Weil told Reuters.
Bidders are also awaiting the outcome of the US Federal Reserve meeting later on Thursday. Investors expect first of all an assessment of the economic situation in connection with the coronavirus.