US dollar surges on funding crunch as stimulus bill falters

The dollar rose against sterling toward its strongest since at least 1985. PHOTO: REUTERS

TOKYO (REUTERS) - The US dollar rose against major currencies on Monday (March 23) as doubts about the US government's response to the coronavirus pandemic and worries about tightening liquidity triggered a renewed flight into cash.

The dollar rose against the pound toward its strongest since at least 1985. The US currency hit the highest in almost three years against the euro.

Against the antipodeans, the greenback rose toward a 17-year high against the Australian dollar and approached an 11-year peak against the New Zealand dollar as investors dumped riskier assets.

It also rose against the Singapore dollar and was trading 0.3 per cent up at 1.4553 as of 8:14am Singapore time.

The US Senate failed to advance a coronavirus stimulus bill on Sunday, but negotiations are ongoing and President Donald Trump said Congress is close to reaching an agreement.

Policymakers around the world are scrambling to cut interest rates and roll out fiscal stimulus, as severe restrictions on personal movement aimed at curbing the spread of the coronavirus slow the global economy.

Major central banks have also ramped up efforts to ease a global dollar funding crunch, but the US currency remains in demand due to the high degree of uncertainty about the unknown flu-like virus.

The dollar rose 0.96 per cent against the pound to US$1.1559, approaching the strongest since at least 1985.

The dollar gained 0.33 per cent to US$1.0360, the strongest since April 2017.

The greenback closed in on multi-year highs against the Australian and New Zealand dollars.

Against the yen, the currency rose 0.11 per cent to 110.92.

Investors have been liquidating positions in safe-havens and other riskier investments to keep their money in dollars due to the uncertainty caused by the epidemic.

Republicans and Democrats in the US Senate scrambled to complete a deal on a US$1 trillion-plus bill aimed at stemming the coronavirus pandemic's economic fallout for workers, industries and small businesses.

But there was no sign of an overarching deal between negotiators, despite Republicans' claims of bipartisan agreement on specific issues including unemployment insurance and small business assistance.

Nearly one in three Americans were ordered to stay home on Sunday to slow the spread of the disease, while Italy banned internal travel as deaths there reached 5,476.

Trump has approved disaster deceleration requests from New York and Washington, while St. Louis Federal Reserve President James Bullard warned unemployment could reach 30 per cent unless more was done fiscally.

Global markets have been upended in recent weeks as the coronavirus spread from central China and governments responded with increasingly strict restrictions on travel and daily life, disrupting businesses and prompting consumers to stay at home and rein in spending.

The virus has now been reported in more than 100 countries and has claimed more than 8,000 lives.

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