Dollar tumbles as Fed rate hike expectations ease after SVB collapse

Lieutenant Ankur Banerjee and Samuel Indyk

SINGAPORE/LONDON, March 13 (Reuters) – The dollar fell on Monday on rising expectations that the Federal Reserve would be less aggressive in monetary policy, after policymakers intervened to limit the fallout from the sudden collapse of Silicon Valley.

* The US government announced several measures earlier in the Asian session, saying all SVB customers will have access to their deposits from Monday.

* Authorities also said depositors at Signature Bank of New York, which was shut down by the New York state financial regulator on Sunday, would be reimbursed with no loss to the taxpayer.

* The Federal Reserve announced that it would make additional funds available through a new term bank funding program, which would offer loans of up to one year to depository institutions, backed by treasury bills and other assets held by these institutions.

* Market turmoil following the SVB bankruptcy has led investors to speculate that the Fed may not raise interest rates by 50 basis points this month. Attention will now turn to Tuesday’s inflation data to gauge the Federal Reserve’s tone.

* The dollar index, which measures the performance of the U.S. currency against six other currencies, fell 0.55% to 103.67, near a one-month low, after Goldman Sachs said he no longer expected the Federal Reserve to raise rates at its March 22 meeting. . Subsequently, the index traded at 103.92.

* Meanwhile, the euro rose 0.67% to $1.0704, near its one-month high of $1.0737, ahead of the European Central Bank’s policy meeting on Thursday.

* The yen rose 0.8% to 133.88 per US dollar, after hitting a one-month high of 133.58 earlier in the session, while the greenback fell 0.6% against the Swiss franc at 0.9155 to the dollar and the pound rose 0.57% to $1.2105.

(Reporting by Ankur Banerjee in Singapore and Samuel Indyk in London; Editing in Spanish by Ricardo Figueroa)