The dollar suffered on Thursday as co-ordinated action from global central banks to ease liquidity tension in the world’s money markets dented its newly found status as a safe-haven currency. Analysts said the dollar had previously benefited as worries over global financial turmoil heightened risk aversion, prompting US investors to repatriate funds that had been invested in foreign equities, while lower inflation expectations had supported demand for US bonds. However, analysts said the decision by global central banks to inject $180bn of emergency dollar liquidity into the market had helped boost risk appetite and damp demand for the dollar. By midday in New York, the dollar fell 0.4% to $1.4370 against the euro and 0.2% to $1.8180 against the pound. The dollar’s losses were largest against the high-yielding Australian and New Zealand dollars, which had been the worst hit among key currencies in the recent market turmoil. Meanwhile, the low-yielding yen, which like the dollar has been widely used as a funding currency, fared worse than the US currency, falling 0.8% to Y105.20 against the dollar.
