Dollar's Fall

AUTHOR:M.J. GDNUS

The dollar's value against a basket of currencies fell last week, for the third time in a row, as expectations grew that the US central bank, the Federal Reserve (Fed), would cut key interest rates.

The dollar index, which measures the value of the US dollar against six major currencies, fell 0.1 percent last week, to 97.73 points. The euro strengthened 0.15 percent, to 1.1715 USD.

The US currency also weakened 0.15 percent against the Japanese yen, with the dollar slipping to 146.95 yen (JPY).

The dollar index hovered above 98 points for almost the entire week, as investors awaited Fed Chairman Jerome Powell's speech at the traditional annual meeting of central bankers in the American town of Jackson Hole, SEEbiz reports.

The most important question on the markets was whether Powell would signal a rate cut or repeat what he has been saying for a long time – that the Fed should not rush to cut rates until it is clear how the increase in tariffs on imports into the US has affected inflation.

The latest data shows that the US labor market is weakening, which is the main reason for the rate cut. On the other hand, the latest data also shows that inflation is still high, which does not leave much room for such a move by the Fed. And, finally, on Friday, Powell said that the risks in the economy are now balanced and that the time for adjusting monetary policy is approaching.

This was interpreted by the market as a signal that the Fed will cut rates by 0.25 percentage points at its meeting on September 17, so the value of the dollar against a basket of currencies sank almost one percent on Friday, recording a decline for the third week in a row.