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Dollar Rate Increases Following Positive Outlook in US Economy After Faltering Against Yen

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February 29
6:49 AM 2016

Asian stocks have been witnessed to fall while yen gathered some value after delivering vague commitments by the G20 finance chiefs. The summit of the financial policymakers for the G20 nations has concluded with no major surprising outcome.

The Shanghai Composite Index has sunk to the lowest since November 2014 with benchmark shares declined in Hong Kong and Japan. Meanwhile yen has added to its biggest monthly gain since 2008. However, China's yuan has declined for the seventh straight day, reports Bloomberg.

New Zealand's dollar has witnessed the biggest two day loss in almost four months as weak data boosted the case for an interest-rate cut. Crude oil has been traded near $33 a barrel since US drillers have cut the number of operative rigs to a six-year low.

With inconclusive ending in G20 meeting, the dollar has been witnessed taking breathe on Monday following a steep climb. The dollar has been down 0.4% to 113.53 yen after rising roughly 0.9 percent to a high of 114.00 on Friday. Reuters observes stronger dollar as outcome of a positive set of US data originated due to the rate hiking by the Federal Reserve Bank.

Indicators have shown a solid rise in US consumer spending and the personal consumption expenditures (PCE) price index. Fourth quarter US GDP growth has also been revised up to 1%. The rise in parameters has been analyzed playing role in gaining some value of US Dollar against Japanese Yen.

The US economy is being resurrected, trust of the US investors has rebounded and this fact has played the biggest role. Furthermore, rate hike by the Fed has also revived expectations and caused halt the recent depreciation of the dollar, cites Koji Fukaya, president of FPG Securities in Tokyo.

Prior to that, dollar has sunk to below 111 yen as risk aversion driven by global growth concerns centering turbulence in Chinese economy. The gloom over Chinese equity markets has stoked demand for Yen, as a safe heaven, reasons CNBC.

The G-20 has been referred as underwhelming by Ray Attrill, National Australia Bank Ltd's global co-head of foreign-exchange strategy in Sydney. There is now no consensus among officials from the world's top economies for an increase in stimulus. International Monetary Fund has trimmed its global growth projections, forecasting 2016 will be a year of great challenges.

Asian stock market has been witnessed to fall following an inconclusive ending of G-20 summit. In another development, yen has gained some value following turbulence in Chinese economy. But in latest development, US Dollar again regained some value following positive outlook from the US economy.

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