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Currency Volatility Down at 2001 Value

June 30, 2008 at 10:15 by Andriy Moraru

U.S. dollarThe currency market volatility fell to its lowest values since the second quarter of 2001, signaling that the central banks probably won’t interfere into the Forex trading to support the U.S. dollar.

As the currency swings became less dangerous to the global financial stability, less analysts believe that the European or U.S. central banks will go for a dollar-supporting intervention. The dollar lost more than 25 percent against the unified basket of most-traded currencies in the past five years.

Although the dollar’s weakness lies as the foundation for the soaring commodity prices, the banks won’t be ruining the current calm state of the market as the stable currency rates may seem more important in a longer term than a stronger U.S. dollar.

JPMorgan Chase & Co’s index of implied volatility on dollar options against other major currencies fell 2.21 percent in the first quarter of 2008 reaching 10.28 percent — its 7-year minimum.

EUR/USD continued to rise today and went up from 1.5776 to 1.5812 as of 8:12 GMT as the dollar is still weaking against other world currencies on the Forex market.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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