The dollar index, which compares the US currency to a basket of six prominent currencies, fell to 93.501 units for the first time since September 28, before rising to 93,565 units, accumulating a 0.35% decline on the day.
Since a week, The dollar index recorded its highest level in a year at 94.563, benefiting from fears of stagflationIn addition to bets that the Federal Reserve will start cutting its monetary stimulus next month, followed by raising interest rates next year.
However, now that the Fed’s adjustment has been discounted, currency markets are raising bets to normalize their policy elsewhere, particularly in the UK, where a cumulative rise of 35 basis points is expected by the end of the year.
The yuan rose in value on the day as fears of contagion eased from the debt woes of Chinese real estate giant Evergrande and some of its peers paying coupons on its bonds. Monetary authorities said last week that the situation can be controlled.
This, combined with the dollar’s decline, sent the local yuan up to 6.3883 against the US pair, the highest since June 16. In naval operations it reached 6.3785 units, the highest level since June 16 and on the way to its highest daily advance since July.
The euro improved 0.4% to $1,167, a level not seen since September 29.
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