Dollar Weakens Against Basket of Currencies for Third Consecutive Week

The value of the dollar against a basket of currencies fell again last week, marking the third consecutive week of decline, although exchange rates did not fluctuate significantly as investors remain cautious ahead of meetings of several of the world’s largest central banks.

The dollar index, which shows the movement of the value of the U.S. dollar against the other six major world currencies, weakened by 0.05 percent last week, to 101.92 points, close to its lowest level since June of last year.

At the same time, the dollar weakened by 0.1 percent against the European currency, causing the price of the euro to rise to 1.0865 dollars, not far from its highest level in nine months.

The exchange rate of the dollar against the Japanese currency, on the other hand, strengthened by 0.2 percent, to 129.85 yen.

The exchange rates of these currencies did not fluctuate significantly as investors remain cautious ahead of meetings of some of the world’s largest central banks.

Among other things, the first meeting of the U.S. Fed this year is awaited. Given the easing of inflationary pressures in the U.S., the Fed is expected to be less aggressive in tightening monetary policy going forward.

Analysts estimate that the U.S. central bank will raise interest rates by only 0.25 percentage points at the February meeting, rather than by 0.50 points, as was the case at the last meeting last year.

Additionally, they believe that the final interest rate at which the Fed would stop the cycle of increases could be less than 5 percent, although most Fed officials have indicated that rates will need to be raised above the 5 percent level to curb inflation.

Last year, the Fed raised rates by a total of 4.25 percentage points, in a range of 4.25 to 4.50 percent, which is their highest level in the last 15 years.

Next week, the leaders of the European Central Bank (ECB) will also hold a meeting. Due to high inflation, further interest rate increases are expected, after they were raised by a total of 2.5 percentage points last year.

It is also expected that the Bank of England will further raise interest rates at its meeting next week.