Risk & Economy » Regulation » Greenback boosted by China one-year lending rate hike

Greenback boosted by China one-year lending rate hike

Negative sentiment on the greenback calmed - if only for now

(SHARECAST) – Tuesday’s surprise move by China to raise its one-year lending and deposit rates by 25 basis points was just the catalyst the US dollar needed to help alleviate the downside pressure that it has been under over the past few weeks.

Despite a number of Federal Reserve officials indicating that the US central bank will soon embark upon further monetary stimulus for the US economy, it seems the Chinese may have done something the Fed had been unable to do – stem the tide of negative sentiment against a rapidly falling greenback.

Yesterday’s US dollar rally was the largest one-day move up in the US dollar index since the 11 August, and if sustained throughout the remainder of this week could well be the start of a new phase of dollar strength.

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