The offer faced huge demand as the amount borrowed reached 489billion Euro which was above expectation. That was interpreted as positive news at first and the Euro reached week high at 1.3195$ boosted by higher risk appetite. Optimism was short-lived as the concern was raised where the funds will be used as banks might take too much risk borrowing cheap funds from the ECB to buy very risky assets. This form of raising money supply in combination with expectation of more ECB rate cuts weighed on the Euro and the currency ended the day lower against the Dollar at 1.3046. Against the Jen it was little changed closing at 101.84.
The Japanese currency depreciated slightly against the Greenback to 78.05 after the Central bank left interest rates near 0% and cut its economic outlook mainly due to sluggish conditions abroad. The Swiss Franc depreciated sharply to 1.2206 as finance minister said capital control and negative interest rates are considered, which showed the government and central bank determination to limit the strength of the domestic currency.
The MPC minutes in Britain showed that the panel voted unanimously to keep interest rates at 0,5% and to continue the 275 billion pounds asset-purchase program financed by issuance of central-bank reserves. The pound ended the day at 1.5674$ after reaching weekly high at 1.5772$.
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The Boost of Liquidity in the Eurozone Put the Euro Under Pressure
Published 12/22/2011, 03:20 AM
Updated 04/25/2018, 04:40 AM
The Boost of Liquidity in the Eurozone Put the Euro Under Pressure
The European Central Bank started the offering of unlimited three years loans to banks in the region to boost the liquidity
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