The dollar is rising against major currencies in anticipation of the Federal Reserve's decisions

On the eve of the Fed meeting, the dollar is strengthening against the world's leading currencies, the market expects the rate to remain unchanged

U.S. Dollars
U.S. Dollars, illustrative photo / pixabay.com

In anticipation of the new meeting of the Federal Reserve System (Fed) of the USA, scheduled for March 19-20, the U.S. dollar is showing growth against the euro, the pound sterling, and the yen.

Experts and economists predict that the Fed will maintain the current level of the federal funds rate in the range of 5.25-5.5% per annum.

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This rate is the highest in the last 22 years and has not changed since July of last year.

At the beginning of the year, the chances of a rate cut in March were seen as 50-50, but due to stable inflation, the Fed is delaying the start of easing monetary policy.

Markets expect three rate cuts of 25 basis points in 2024, which corresponds to the Fed's forecasts announced at the end of last year, although analysts do not rule out that there will only be two cuts.

The current exchange rate of the euro to the dollar is $1.0854, which is lower than $1.0872 at the close of the previous trading session. The pound is trading against the dollar at a rate of $1.2701, having fallen from $1.2728. And the dollar's rate against the yen rose to 150.58 from 149.16, despite the change in the Bank of Japan's exchange rate policy.

For the first time since 2007, the Bank of Japan raised the key interest rate, setting the range for the short-term deposit rate of commercial banks from 0% to 0.1% instead of the previous -0.1%. Since 2016, the Japanese regulator has kept the rate at a negative level.

In addition, the Bank of Japan announced the end of yield curve control for ten-year bonds, which had previously been maintained at a level of about 0% with the possibility of fluctuation up to 1%.

The decision and comments of the Bank of Japan were met by the market as too soft, which led to a decrease in the value of the yen.

Previously, according to analysts' expectations, the Reserve Bank of Australia decided to keep the key interest rate at the previous level of 4.35%, without making any changes.

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