Dollar slips as banks rescue makes room for relief rally
The dollar slipped on Friday as risk sentiment improved after authorities and banks moved to ease stress on the financial system in major markets, taking heat off other major currencies that tumbled earlier in the week in the wake of bank turmoil.
Large U.S. banks on Thursday injected $30 billion in deposits into First Republic Bank, swooping in to rescue the lender, which was caught up in a widening crisis triggered by the collapse of two other mid-size U.S. banks over the past week.
Cautious calm spread across markets on Friday, giving room for rises in risk-sensitive currencies like the Australian and New Zealand dollars, which were among the largest gainers in Asia trade.
The Aussie rose 0.4% to $0.6684, while the kiwi edged 0.3% higher to $0.62145.
The $30 billion rescue package, put together by top power brokers from the U.S. Treasury, Federal Reserve and banks, followed Credit Suisse’s announcement earlier on Thursday that it would borrow up to $54 billion from the Swiss National Bank.
It had similarly become embroiled in widespread contagion following the implosion of U.S.-based Silicon Valley Bank (SVB).
This report’s information was first seen on ZAWYA; to read more, click this link.