Fed eases supplementary leverage ratio requirements for one year

Anil Panchal FXStreet

The US Federal Reserve (Fed) recently took one more step to combat coronavirus (COVID-19). The Fed announced changes to calculate the supplementary leverage ratio, which the big banks have to maintain, for one year.

“The Federal Reserve on Wednesday said it was temporarily taking steps to ease an obscure capital requirement for large banks to address strained conditions in the Treasury market,” said the Wall Street Journal.

The details suggest that the temporary change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the leverage ratio, and will be in effect until March 31, 2021. The vote to ease the requirement was unanimous.

FX implications

While the early Asian hours restrict the market’s reaction to the news, this adds strength to the US dollar while signaling no major changes to the risk-tone amid the early Thursday.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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