After the Fed, the dollar may not subside

SINGAPORE (Reuters) – When the U.S. Federal Reserve cut interest rates to near zero on Sunday, the dollar fell, since the move blew away the yield on owning dollars and with it much of their attraction.

Yet few are willing to bet on a prolonged decline. Pandemic fears are roiling markets, driving a scramble for both safety and funding in the world’s reserve currency.

Analysts are already discounting the dollar’s Monday slide as modest and maybe temporary, given the scale of the Fed’s emergency move. They are also drawing a distinction between the unwinding of the dollar’s yield and what happens next.

“We had this very, very bold move by the Federal Reserve,” said Paul Mackel, head of emerging markets FX research at HSBC in Hong Kong. “(But) if you look at the reaction of markets, it’s very mixed if not underwhelming. And in the currency market…