The international currency markets are closing as investors scramble to buy dollars, euros and other foreign currencies after the U.S. Federal Reserve lifted interest rates on Tuesday, lifting fears of another global recession.
The Federal Reserve said it would cut its key rate by a quarter-point, the first time the central bank has raised rates in more than a year.
The move comes after the Federal Reserve lowered its benchmark overnight interest rate to a record low of 0.25 percent.
On Tuesday, U.K. markets closed at their lowest levels since March 19, as investors looked to cash in on the Fed’s announcement and the dollar’s weakness.
The dollar index fell to a three-month low against a basket of currencies, and U.N. economic data also showed a slowdown in global economic activity.
A dollar index tracking the greenback fell as much as 0.4 percent to $1.3435 as traders bought foreign currencies to hedge against the Fed move.
The dollar index closed at $1,344.25.
The greenback also shed more than 0.3 percent against a U.F.C. basket of major currencies.
“This will have an impact on the overall market, as it will lead to higher costs for the consumer and a reduction in the demand for the dollar,” said Andrew J. Smith, chief currency strategist at Credit Suisse in New York.
“It is a very positive sign.”
The greenback is the global currency’s most valuable asset.
It has lost about 90 percent of its value in the last five years and has lost over $1 trillion since 2007, according to the U