By Geoffrey Smith
Investing.com — The federal Reserve said that it would increase the frequency of swap operations in dollars agreed with other western central banks, thus strengthening its efforts to ease a global shortage of dollars in the financial markets.
“The Bank of Canada, the Bank of England, the Bank of Japan, the european central Bank, the federal Reserve and the swiss national Bank are today announcing coordinated action to further strengthen the provision of liquidity through standing agreements to swap lines of liquidity in u.s. dollars.
In order to improve the efficiency and effectiveness of swap lines in the provision of funding in u.s. dollars, these central banks have agreed to increase the frequency of operations to 7 days, which will go from weekly to daily. These daily operations will commence on Monday 23 march 2020 and will continue until at least the end of the month of April. Central banks will also continue to perform operations on a weekly basis for 84 days.”
The news comes at the end of a week where the dollar has soared against the currencies of developed and emerging markets, investors around the world looking for the security of the financial asset, the most liquid in the world.
At 15: 30, the dollar index was down 0.9% to 101,85, after having bounced off the lows intraday. The dollar rose 4 percent against a basket of currencies of developed markets this week, reaching its highest level in 17 years at the height of the contraction of global markets.