By Stanley White
TOKYO (Reuters) – The dollar fell against a broad range of currencies on Monday after the U.S. Federal Reserve made another surprise interest rate cut and major central banks took steps to relieve a shortage of dollars in financial markets.
The U.S. Federal Reserve cut rates to a target range of 0% to 0.25% and said it would expand its balance sheet by at least $700 billion in coming weeks.
Five other central banks also cut pricing on their swap lines to make it easier to provide dollars to their financial institutions facing stress in credit markets.
The moves come as policymakers try to respond to a brutal months-long sell-off in financial markets due to worries about the economic impact of the global spread of the coronavirus.
The dollar fell 1% to 107.00 yen early on Monday in Asia in reaction to the Fed’s move which was announced on Sunday evening U.S. time.
The greenback also fell 1% to $1.2418 per British pound .
Against the euro (), the dollar slid 0.7% to $1.1200.
The Fed, the Bank of Canada, European Central Bank, Bank of England, Bank of Japan and Swiss National Bank also agreed to offer three-month credit in U.S. dollars on a regular basis and at a rate cheaper than usual.
The move was designed to bring down the price banks and companies pay to access U.S. dollars, which has surged in recent weeks as a coronavirus pandemic spooked investors.
The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first emergency cut since the financial crisis in 2008, but that move failed to stem market volatility.
The Reserve Bank of New Zealand joined in with a cut of 75 basis points to its rates, and speculation was rife the Reserve Bank of Australia would also ease.
The New Zealand dollar fell 1.3% to $0.5990, while the Australian dollar fell 1.2% to $0.6112.
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