What’s the reason for the US dollar’s weakness? – ZAWYA

What’s the reason for the US dollar’s weakness? – ZAWYA

The US dollar matters. It is the world's reserve currency and the most traded currency in global currency markets. Oil is traded in US dollars, and many countries, especially in the Gulf Cooperation Council (GCC), have pegged their currencies to the greenback. This is a good enough reason to look at what is behind the dollar's recent slide and how it affects the various stakeholders.The dollar index, which tracks the greenback against a basket of the world's most relevant currencies, has fallen 10 percent since the currency's high in March. In July the dollar slid 4 percent to a 2-year low. At the same time gold, another safe haven, hit a record high over fears of inflation, because of massive stimulus packages across the world, as well as the state of the global economy.The Federal Reserve held its Federal Open Market Committee (FOMC) last week, leaving interest rates unchanged near zero percent. The swap lines “” liquidity arrangements “” with the central banks in 14 countries were extended through March 2021, which is important in the context of ensuring liquidity in the international monetary system.The dollar index, which tracks the greenback against a basket of the world's most relevant currencies,