Dollar Climbing Against a Basket of Currencies Easing Anxieties

Dollar Climbing Against a Basket of Currencies Easing AnxietiesThe recent economic mess which started with the slowing Chinese economic growth and a devaluation of yuan on August 11, caused havoc in the world economies. Fearing further drop, investors shifted to safe haven assets that pulled up the dollar against a basket of other currencies.

Even the stock markets in the U. S and Europe wobbled and on Black Monday, August 24, dropped sharply, concluding in a 1,000 points intra-day drop in the Dow Jones Industrial Index. Oil futures were hit hard as they slid to under US$40 a barrel. Zinc, copper, aluminium, and lead futures also dropped to their five or six year lows. The Malaysian ringgit fell to its lowest level noted since 1998 during the Asian crisis.

The global economic chaos cannot be tied to only one reason and was a mix of many factors. However most of the market watchers say that China's poor economic growth was the main reason to blame for the downward spiral.

China which is the world's second biggest economy with the fastest growing rate suddenly pulled its brakes failing to boost growth even with a slew of reform and stimulus introduced by the government.

The dollar index traded at 95.688 on Friday which was close to its one-week high of 96.031. After diving to
92.621, the index risen three percent or more. It reached a level above 121.00 against the yen and managed to bounce back from the low of 116.15 seen on Monday.