A dramatic collapse of the dollar, unseen for a decade
The US dollar continues its dramatic collapse today, coming close to its biggest monthly decline in a decade after investors worried that the recovery of the US economy would be hampered by the fight to curb the epidemic of the new coronavirus (COVID-19 ), notes Reuters.
The weakness of the US currency strengthened the euro, as the single European currency touched 1.19 dollars, the strongest performance since May 2018 and enjoys its biggest monthly appreciation since September 2010.
Confidence in the dollar was further undermined after US President Donald Trump yesterday proposed postponing the presidential election in November.
This came on the same day that US gross domestic product (GDP) data showed an annual contraction of 32.9 percent in the second quarter, the fastest pace since the Great Depression.
The dollar index fell to 92,546 at the beginning of trading today, a level last seen in May 2018, before recovering to 92,847.
The dollar fell nearly five percent in July, with most of the decline coming in the last 10 days as new coronavirus infections rose in several U.S. states, and some recent data show that economic recovery is slowing.
Unicredit analysts said they “continue to expect the weakness of the US dollar to persist in August, a month in which sharp intraday movements are more likely due to lighter market conditions.”
But they said that given concerns about global economic growth and concerns about the further development of COVID-19, as well as the depreciation that the US dollar has already suffered in recent weeks, the downward pressure will be “less intense” next month.