Wednesday, March 18, 2009

US Dollar takes huge hit today

Chart below!

US dollar tumbles as Fed says will buy Treasuries

The U.S. dollar plunged on Wednesday, hitting a two-month low against the euro, after the Federal Reserve said it will buy $300 billion of long-dated Treasuries over the next six months to boost the U.S. economy.

The euro surged above $1.34 for the first time since mid-January as analysts feared the Fed's move would flood the market with dollars and increase already large U.S. deficits.

The Fed also said it would extend mortgage-related debt purchases to help ease credit market conditions.

"Bottom line is that the Fed is adding $1 trillion to its balance sheet and that's a lot of taxpayer money," said Greg Salvaggio, vice president for trading at Tempus Consulting in Washington. "Interest rates now are effectively negative across the board. The dollar is selling off because this may contribute to long-term weakness in the currency."

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