US Dollar Falls as Debt Talks Stuck

Saturday, May 20 2023 – 09:06 WIB

VIVA Business – The US dollar fell against a basket of other major currencies in late trading Friday (Saturday morning WIB), as investors bet that the Fed was less hawkish and negotiations on the US debt limit abruptly stalled fueling fears of a June 1 default.

The dollar index, which measures the greenback against six other major currencies, was down 0.37 percent to 103.1924 in late trading. In late New York trading, the euro increased to 1.0807 dollars from 1.0767 dollars of the previous session, and the British pound rose to 1.2448 dollars from 1.2404 dollars in the previous session.

The US dollar bought 138.0760 Japanese yen, lower than 138.6390 Japanese yen in the previous session. The US dollar fell to 0.8998 Swiss franc from 0.9050 Swiss franc, and it was down to 1.3509 Canadian dollars from 1.3510 Canadian dollars. The US dollar fell to 10.5292 Swedish krona from 10.5839 Swedish krona.

Federal Reserve Chair Jerome Powell commented on Friday (19/5/2023) that the situation in the banking system is under control and the Fed does not need to raise interest rates as much as previously thought. Powell’s statement was quite dovish, contrary to market expectations.

Meanwhile, it was reported that high-stakes talks about increasing the US government debt limit abruptly stalled on Friday (19/5/2023) after Republican negotiators left the room. It is unclear whether negotiations will resume this weekend.

“Until people are willing to have a reasonable conversation about how you can actually move forward and do the right thing, then we’re not going to sit here and talk,” Garret Graves, Republican representative from Louisiana, lead negotiator appointed Speaker of the House Kevin McCarthy in talks, told reporters as he walked out of talks on Friday (19/5/2023).

The news eats away at the dollar. “This provides cold water on the real progress noted yesterday where House Speaker McCarthy thinks the bill could go to the House in the coming week,” Action Economics wrote in a blog. (Ant/Between)