In volatile trading the euro fell 1.6 percent to $1.0726 per dollar, its lowest since April 2017, as traders rushed to dump euro positions over coronavirus fears. The fall was despite a fresh round of stimulus from the European Central Bank who announced a €750 billion ($817 billion) asset-purchase programme in response to the coronavirus outbreak, which threatens to paralyse swathes of the global economy.
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Meanwhile, the pound sterling teetered near its lowest point since at least 1985, while the Australian dollar tumbled to a 17-year low and the New Zealand dollar was at its weakest in 11 years as investors dumped riskier assets.
The euro’s plunge boosted the dollar’s value against a basket of its peers.
Ulrich Leuchtmann, head of FX and commodity research, said: “There are still fears about refinancing of European debt in US dollars.
The euro plunged to its lowest in three years amid the coronavirus pandemic (Image: GETTY )
“The swap facilities should normally give access to euro funding. But I think this is not calming down the market.
“There’s a general assumption that there are a lot of US funding needs, not just in Europe but also around the world as a whole.”
Manuel Oliveri, a currency strategist at Credit Agricole in London, added: “Central banks are stepping up their liquidity actions but it is not enough to make sure the dollar scarcity disappears, and as a result the dollar continues to be the favoured currency across the board.
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The ECB’s purchase scheme, announced after an emergency meeting late on Wednesday, came less than a week after officials launched fresh stimulus measures.
The dollar firmed to 102.30 against other currencies, its highest level since March 2017.
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Euro crisis: European Central Bank announced a €750 billion cash boost (Image: GETTY)
It has gained more than 7.5 percent in the past nine trading sessions.
On an eight-day rolling basis, it is on its biggest rise since September 1992.
Though global central banks have pumped in billions of dollars in emergency liquidity injections in recent days and strengthened swap lines with some global central banks, dollar funding pressures remain exacerbated across the board.
The coronavirus is spreading across the world at an alarming rate (Image: EXPRESS)
Investors are selling what they can to keep their money in dollars due to the unprecedented amount of uncertainty caused by the coronavirus pandemic.
Elsewhere, the Swiss franc edged higher against the euro after the ECB’s move.
This was because investors had expected the ECB to keep rates on hold, though the franc remained within striking distance of a July 2015 high hit overnight at 1.0532 francs per euro.