The US dollar on Friday hit a more than two-and-a-half-year low against a basket of major rivals on reduced expectations for another US Federal Reserve rate increase this year, while the euro hit multiyear highs in the wake of a European Central Bank (ECB) meeting.
New York Fed President William Dudley, while saying in a speech on Thursday that the central bank should continue gradually raising US interest rates, sounded slightly less confident than in his previous hawkish comments.
The tone reduced demand for the US dollar and helped knock the greenback to a roughly 10-month low against the yen to ￥107.33.
The US dollar fell 2.2 percent against the yen for the week to mark its biggest weekly percentage decline in about 13 months.
In Taipei, the New Taiwan dollar rose against the greenback on Friday, gaining NT$0.056 to close at NT$30.006. The NT dollar rose 0.5 percent against the greenback from last week’s NT$30.156.
Concerns over the impending short-term impact of Hurricane Irma on the US economy also weighed on the US dollar, analysts said.
“What everybody is trying to do is price out any potential Fed hike for the remainder of this year,” said Dean Popplewell, chief currency strategist at Oanda Corp in Toronto.
The US dollar index, which measures the greenback against a basket of six major rivals, hit its lowest level since January 2015 of 91.011 and capped its biggest weekly decline since late June of 1.6 percent.
The euro rose as much as 0.6 percent to its highest since January 2015 of US$1.2092.
While the euro pared most of its gains, leaving it roughly flat against the US dollar at US$1.2027, it posted a weekly gain of 1.4 percent, putting it up more than 14 percent this year against the US dollar.
ECB President Mario Draghi’s comments on Thursday did little to deter euro bulls, and a report that central bank officials were in broad agreement that their next step would be to reduce their bond purchases also supported the currency.
The ECB “left the mystery out there” with regard to tapering, said Greg Anderson, global head of foreign-exchange strategy at BMO Capital Markets in New York.
The US dollar was up 0.2 percent against the offshore Chinese yuan at 6.4990 yuan, rebounding off a low of 6.4437 after sources said the People’s Bank of China plans to scrap reserve requirements for financial institutions settling foreign exchange forward yuan positions with effect from tomorrow.
Additional reporting by CNA
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