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Dollar eases as Biden ends reelection bid; yuan steady after rate cut
By Kevin Buckland
TOKYO (Reuters) – The dollar eased on Monday in the initial reaction to U.S. President Joe Biden’s decision to end his reelection campaign, clearing the way for another Democrat to challenge Donald Trump.
China’s yuan was largely unfazed by the central bank’s decision to cut a key interest rate.
The U.S. currency slipped 0.08% to 157.38 yen early in the Asian day, while the euro gained 0.11% to $1.0895.
Biden announced he was exiting the race on Sunday, and endorsed Vice President Kamala Harris to replace him as the Democratic candidate in the November election.
Former President Trump, the Republican nominee, sits well ahead in betting markets following Biden’s disatrous debate performance last month and a surge in questions about his mental competence.
Commonwealth Bank of Australia strategist Joseph Capurso warned it was too early to read too much in the dollar’s reaction.
The bottom line is what the polls show this week,” Capurso said, explaining that a decline in odds for a Trump win should see the dollar weaken, and vice versa.
“Harris might be a stronger candidate, but is it enough to turn the polls?”
The British pound gained 0.15% to $1.2931.
The Australian dollar added 0.08% to $0.6691.
Meanwhile, the dollar was steady at 7.2881 yuan in offshore trading after the People’s Bank of China cut the seven-day reverse repo rate to 1.7% from 1.8%, saying the move would improve open market operations and support the real economy.
(Reporting by Kevin Buckland; Editing by Lincoln Feast.)
Frequently Asked Questions about Dollar eases as Biden ends reelection bid; yuan steady after rate cut
1What is foreign currency?
Foreign currency refers to any currency that is not the domestic currency of a particular country. It is used in international trade and investment, allowing businesses and individuals to conduct transactions across borders.
2What are interest rates?
Interest rates are the percentage charged on borrowed money or paid on savings. They influence economic activity by affecting consumer spending, borrowing, and investment decisions.
3What are financial markets?
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives. They play a crucial role in the economy by facilitating capital allocation.
4What is currency hedging?
Currency hedging is a risk management strategy used to protect against fluctuations in exchange rates. It involves using financial instruments to offset potential losses in currency value.
5What is economic growth?
Economic growth refers to the increase in the production of goods and services in an economy over time. It is typically measured by the rise in Gross Domestic Product (GDP).
