NEW YORK: The dollar fell on Monday as markets bet the Federal Reserve will be less aggressive in raising interest rates to curb inflation after US authorities stepped in to limit the fallout from the sudden collapse of Silicon Valley Bank.

President Joe Biden said the administration’s swift actions on Sunday to ensure depositors can access their funds in SVB and Signature Bank should give Americans confidence that the US banking system was safe.

The dollar index, which measures the greenback against six other currencies, fell 0.46% as short-dated Treasury yields tumbled.

The two-year note’s yield plunged 48.9 basis points to 4.099% in the biggest one-day drop since the financial crisis of 2008. The note was on track for its biggest three-day decline since the Black Monday crash of 1987.

The Japanese yen strengthened 1.51% at 132.98 per dollar, while the dollar fell 1.12% against the Swiss franc at 0.911.

The euro, meanwhile, was up 0.62% to $1.0709. Earlier it hit a near one-month high of $1.0737, ahead of the European Central Bank’s policy meeting on Thursday.

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