Dollar Falls as Investors Worry over U.S. Tax Plans

The dollar was on track for weekly losses as it fell on Friday after investors were disappointed by the U.S. Senate Republicans’ tax bill which will delay expected corporate tax cuts.

The dollar index, which is used to measure the greenback’s strength against a basket of six other major currencies, was almost flat on the day at 94.483 after a slip of 0.36 percent in the previous session and was behind 0.5 percent for the week.

The bill submitted by the Senate Republicans which states their plan to rewrite the tax code differs from their House counterparts. Both the House and the Senate’s proposals would cut the corporate tax rate from 35 percent to 20 percent, but unlike the House version, the Senate plan would push the implementation back till 2019.

Both bills will have an outcome of $1.5 trillion addition to the U.S. budget deficit and national debt over the course of 10 years.

The plans call for a tax on $2.6 trillion in foreign profits that are owned by U.S. multinationals. The Senate demands for that the tax will be 12 percent for cash and liquid assets, and 5 percent for non-liquid assets. The House made changes on its bill on Thursday, going to 14 and 7 percent, respectively.

The dollar was down 0.1 percent at 113.40 yen, fell 0.6 percent this week and is beneath its eight-month high of 114.737 listed on Monday. The euro rose 0.1 percent to $1.1650, 0.4 percent for the week and is gaining from its three and a half month low of $1.1553 logged on Tuesday.

Yuan Parity at 6.6282 against Dollar

The People’s Bank of China (PBOC) set the Yuan parity rate at 6.6282 against the dollar on Friday, which dropped when compared to its previous close of 6.6378.

The weighted average of prices given by market makers was set by the China Foreign Exchange Trade System. The highest and lowest offers were not included in the calculation. The central bank only allows the dollar/yuan rate to move no more than 2 percent above or below the central parity rate.

A Yuan level of 7 against the dollar, USD/CNY, has been predicted by market watchers as a key touchstone for sentiment in the near term.

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