By: Barbara Zigah
The U.S. Dollar Index slipped in Asian trading today, falling after yesterday’s surprise rate hike by the People’s Bank of China. As reported at 2:50 p.m. (JST), the U.S. Dollar Index, a gauge of the greenback’s strength versus a basket of major currencies, traded at 78.011 .DXY, a decline of .2%; in yesterday’s trading session, and prior to the rate hike announcement, the Dollar Index had gained more than 1.6%.
In recent weeks, investors raised their stakes versus the greenback, on speculation that the Federal Reserve will soon launch additional quantitative easing measures; some analysts predict that move as soon as early November. One Federal Reserve Governor, however, quickly pointed out that the further easing is not a foregone conclusion.
Yesterday, the Chinese central bank hiked key interest rates by .25%, which is the first upward movement in interest rates in almost three years. Traders were initially concerned that falling share prices in the Asian and Chinese markets would strengthen the Japanese Yen; but those fears were unfounded as Chinese shares rose .8% following an initial decline.
One analyst says that he believes that the relatively small rate hike won’t be too much of a factor on Asian growth in the long run.