The Malaysian ringgit like the other emerging Asian currencies continued to fall today as the U. S. Congress failed to pass the $700 rescue plan for the financial institutions and the global volatility rose on the deeper crisis expectations.
The U.S. dollar rose today against the euro and the pound after the U. S. President and Congress leaders reached the agreement on the $700 billion plan to buy out lossy assets from the financial companies.
The bet on the euro short positions may increase in the following months as the Paulson’s rescue plan may pull out the U.S. financial system from the crisis, while the Eurozone’s economy will be in recession.
The U.S. dollar dropped against three other major currencies for the first time in three days today after George W. Bush said that U.S. may enter a long and painful recession period if the necessary measures aren’t taken soon.
The Asian currencies declined today against the U.S. dollar as the delay of the U.S. financial rescue plan may diminish the attractiveness of the risk-ridden regional currencies in conjunction with the economic output decline in Asia.
The Chinese yuan rose today to its new highest level against the dollar as the Forex traders reacted on the U.S. bank-rescue plan of dumping $700 billion into the economy that will hurt some important macroeconomic statistics and increase the supply of dollars.
Henry Paulson’s plan to rescue the financial institutions tied with the illiquid mortgage assets will not only cost U.S. $1 trillion of tax-payers’ money, but it may also end the dollar’s rally that was rocking the Forex market since mid July.
The U.S. dollar rose fastest in more than a month against the Japanese yen today after the financial markets soared stimulated by the joined effort of the U.S., Eurozone’s and Japan’s central banks.
The Japanese yen fell today against the other major currencies on Forex after the central bank of the developed countries said that they will act together to provide the necessary liquidity to the global financial system.
The Great Britain pound fell against the euro, while being moderately up against the other major currencies, after the release of the BoE’s minutes and the jobless claims report in the United Kingdom today.