Category: Currencies

Finally some good news for US dollar. After hitting 25-month low on Monday the dollar rebounded on Tuesday and registered an increase against major currencies. However the currency still remains weak as investors expect interest rates to remain low. The dollar index which measures dollar’s performance against six major currencies increased by 0.2% to 75.18 midway through the trading day. On Monday the index had fallen to a low of 74.93 which was also its weakest level since August 2008. Tuesday’s gain in dollar was expected as investors felt that the Monday’s fall in the currency was too much and too fast without any fundamental reason. Analysts also are of the opinion that the investors don’t have any reason to sell dollar any further after its recent falls. Dollar gained maximum against Sterling on Tuesday. Sterling lost ground on Tuesday after Fitch commented that among the  [...]

The recent decline in the value of dollar has again put the dollar in the line of fire as a reserve currency. Currently the United States Dollar is the most widely held reserve currency in the world. What is a reserve currency? A reserve currency or anchor currency is a currency which is held in significant quantities by many countries in their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market such as oil and gold. Holding the reserve currency permits the holding country to purchase the commodities at a marginally lower rate than other nations, who must exchange their currency with each purchase and pay a transaction cost. It also permits the government holding the currency to borrow money at a better rate, as there will always be a larger market for that currency than others. Currently with an average of two thirds  [...]