The dollar plunged to a 15-month low yesterday after investors seized on positive elements in a series of economic statistics to show that America’s economic recovery continues apace.
The US Dollar Index, which measures the greenback against a basket of major currencies, fell to 74.399 points in morning trading, its lowest level since August 2008. Investors, who see the dollar as a safe haven, have sold the currency to invest in riskier assets as their confidence has grown that America’s economy will continue to improve.
Gold has benefited from the dollar’s weakness and yesterday soared to a record high of $1,180 an ounce, spurred on by reports that India might buy additional bullion from the International Monetary Fund. The IMF sold 200 tonnes of gold to India’s central bank for $6.7 billion (£4 billion) this month and yesterday sold 10 tonnes to the Sri Lankan central bank for $375 million.
The dollar sell-off was given added impetus on Tuesday when the Federal Reserve described the currency’s loss of value as “orderly”, indicating that the central bank did not intend to step in to halt the decline.