New York, New York (PressExposure) March 06, 2010 -- "Mann International": The US dollar recorded its highest level against the euro in 9 months after the US Federal Reserve shocked financial markets by raising the rate on its discount window facility.
It reached $1.35 against the single European currency which has been under sustained pressure since the debt crisis afflicting Greece raised concerns among investors of the possibility of default by several member nations of the EU.
The dollar's surge was felt by sterling which decline to $1.5377 at one point.
"Mann International", the Asian-based asset manager, told clients that they should not read too much into the surge in the dollar's fortunes given the continuing headwinds facing the world's reserve currency.
The dollar's strength impacted upon precious metals and crude oil for much of the trading session but any losses were pared as investors digested the fact that the rate hike could not be construed as tightening of monetary policy since neither credit card nor mortgage loans would be affected.
"Mann International" analysts, however, suggested that the higher rate may encourage banks and other financial institutions eligible to borrow directly from the Fed to rein in some of their more speculative endeavors to rebuild their balance sheets by making it more expensive and risky for the banks to engage in the "carry trade" where they borrow at near zero and buy higher-yielding assets like equities.