World finance leaders tried to lift confidence with emergency measures by pouring unprecedented aid into panic-hit global financial markets.
Another dramatic round of monetary stimulus injected a ray of hope for markets battered by worries over the impact of the coronavirus shutdown to a Panic-hit global financial system.
The European Central Bank pledged late on Wednesday to buy 750 billion euros ($820 billion) in sovereign debt through 2020. That brought some relief to bond markets and also halted European shares’ slide.
Markets elsewhere failed to respond to central bank action. Before the ECB move, the U.S. Federal Reserve promised a liquidity facility for money market mutual funds. The Bank of Japan made two unscheduled bond purchases totalling 1.3 trillion yen ($12 billion).
The Australian central bank slashed interest rates to a record low of 0.25%.
Coronavirus cases ballooned in the current epicentre Europe and London became the latest major center bracing for lockdown. The pandemic has killed almost 9,000 people globally, infected more than 218,000 and prompted widespread emergency lockdowns. The epidemic has stunned the world and drawn comparisons with traumatic periods such as World War Two, the 2008 financial crisis and the 1918 Spanish flu.
START TRADINGForex – Panic-hit global financial system
Investors rush to put their money in U.S. dollars, the world’s most liquid currency and seen as a safe haven in times of crisis.
The U.S. dollar surged as extraordinary steps by central banks across the world to stem a coronavirus-induced financial rout saw mixed success. The dollar gained as investors rushed to secure liquidity rising 1% against major currencies to its highest since March 2017.
The dollar rose versus the yen to a three-week high, also providing a tailwind for the broader market.
Τhe Australian dollar tumbled to a 17-year low.
Τhe New Zealand dollar was at its weakest in 11 years as investors dumped riskier assets.
Τhe Swiss franc edged higher against the euro after the ECB’s move, as investors had expected the ECB to keep rates on hold. However, the franc remained within striking distance of a July 2015 high hit overnight at 1.0532 francs per euro.
The euro plunged to its lowest level in three years on Thursday as demand for dollar funding stayed high. In volatile trading the euro EUR=EBS fell 1.6% to $1.0726 per dollar, its lowest since April 2017.
The pound rallied to the day’s highs on Thursday after the BoE cut interest rates to 0.1% and ramped up its bond-buying program. Sterling jumped 0.8% to $1.1724 while the British currency rallied against the euro, last up more than 1% at 92.54 pence per euro.
For the British pound versus the dollar, expected volatility gauges leapt to 24.4%, their highest level since before the 2016 Brexit vote.
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Sources: Reuters, Investing, CNN money