Bloomberg Dollar Index Rises to Record Amid Staggering FX Moves

(Bloomberg) -- The Bloomberg dollar index surged to an all-time high as economic slowdown fears persisted in the face of governments’ pledges of stimulus to combat the damage from the coronavirus.

The gauge of the U.S. greenback gained for a seventh straight day amid turbulence in equities and bonds as investors sought to raise cash. Dollar-funding markets remained strained, although improved from extreme levels in recent days amid efforts by central banks, including the Federal Reserve, to add liquidity.

The moves in foreign exchange markets were staggering. The pound sank to the weakest in about 35 years, while the Norwegian krone retreated to the lowest since at least 1971. The gains in the Bloomberg dollar index pushed it above the previous record high, set in 2017, leaving it the strongest in data going back to 2005. Investors sought refuge in the dollar as stocks plunged anew amid concern that the trillions of dollars of stimulus measures announced by multiple countries won’t be enough to avert a global recession.

“Liquidity stress, and a rush to get hold of dollar liquidity in
particular, sends the dollar higher against everything,” Kit Juckes, a strategist at Societe Generale SA in London, said in an email. “The markets have been really spooked. The dollar is the big winner.”

Here’s a look at key currency levels reached Wednesday:

• Sterling fell as much as 5% to $1.1453, the lowest since 1985
• The Canadian dollar fell 3.1% to 1.4637, touching the weakest since January 2016
• The Norwegian krone crashed 9% to the weakest since at least 1971
• The DXY dollar index reached a three-year high. It’s about 40% below the record high set in 1985.

Read More: Surging U.S. Dollar Is Next Big Headache for World Economy

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