Khaberni - The dollar rose to its highest level in more than two months during early Asian trading on Wednesday, as risks associated with the US government shutdown intensified, sparking new concerns among investors and boosting demand for safe haven assets.
The dollar index, which measures the performance of the US currency against 6 other currencies, rose by 0.3% to 98.91, its highest level since August 5, after US President Donald Trump threatened to carry out a mass layoff of federal employees during the shutdown crisis.
Analysts from Westpac wrote in a research report, "With no solution in sight for the government shutdown, sentiment in the financial markets has deteriorated."
The New Zealand dollar fell by as much as 1% to a low of 0.5739 dollars after the New Zealand Reserve Bank surprised the market with a 50 basis point rate cut, a larger-than-expected reduction, and indicated further easing in the future following recent deterioration in economic data.
Joseph Capurso, head of foreign currency, international, and economic geography research at Commonwealth Bank of Australia said, "The market was expecting only a 30% chance of a 50 basis-point rate cut from the New Zealand Reserve Bank today."
He added, "The drop in the New Zealand dollar was inevitable."
The Australian dollar fell 0.4% in recent trades to 0.65595 dollars.
The dollar traded at 152.535 yen, up 0.4% from the levels recorded late on Tuesday, hovering around the strongest level since February, as investors assess the impact of the economic policies of Sanae Takaichi, who won the leadership of the ruling party, paving the way to become the new Prime Minister of Japan.
Investors wonder whether the victory of the pupil of the late former Prime Minister Shinzo Abe might herald similar stimulus policies that could bolster stocks but weaken the yen.
The euro recorded 1.1618 dollars, down 0.3% during the Asian trading hours, while the British pound recorded 1.3395 dollars, down 0.2%.
The offshore yuan fell 0.1% from the previous session to 7.1506 yuan per dollar.
