Most Asian currencies rose sharply on Friday amid easing fears of a global banking crisis, while the dollar retreated as markets also bet that the Federal Reserve will soften its hawkish stance to prevent more economic pain.

was among the best performers for the day, rising nearly 0.5% as a positive outlook on the Chinese economy from Goldman Sachs also boosted sentiment. The investment bank expects China’s economy to grow 6% this year, more than government forecasts of 5%.

Economic data released this week showed that certain facets of the economy were recovering from three years of COVID lockdowns. But growth in the manufacturing sector still remained below full capacity.

The rose 0.6% and was set to add 1.4% this week, having benefited greatly from increased safe haven demand. A mild improvement in Japan’s massive also helped sentiment towards the yen, amid easing supply chain issues.

Broader Asian currencies advanced amid increased risk appetite, as fears of an imminent banking collapse were eased by several major U.S. lenders supporting First Republic Bank (NYSE:). This came after Swiss lender Credit Suisse Group AG (SIX:) scored an up to $54 billion credit facility from the Swiss National Bank to fortify liquidity levels.

The support for banks, coupled with government reassurances that the banking sector was stable, helped ease concerns over an imminent collapse in the banking system, following the failure of several U.S. banks over the past week.

The and dollar index futures retreated about 0.3% each amid bets that the Fed will taper its hawkish stance to prevent further pressure on the economy from rising interest rates.

The collapse of several U.S. banks in recent weeks was driven largely by a slump in bond prices, to which lenders such as Silicon Valley Bank were disproportionately exposed.

Markets are now pricing in a nearly 90% chance that the Fed will hike by a smaller 25 basis points next week.

Risk-heavy Southeast Asian currencies advanced on Friday, with the rising 0.6%, while the added 0.5%.

The rose 0.3% after data showed the island state’s key non-oil exports shrank slightly less than expected in February from the last year.

The rose 0.2%, also benefiting from weakness in oil markets, while the surged 0.8% after logging sharp losses over the past week.

NEW YORK/LONDON (Reuters) -The dollar fell and the euro rose on Thursday after the European Central Bank raised interest rates as planned despite market chaos in recent days, in a sign the Federal Reserve also will likely raise rates next week as both stay on track to tame inflation.

The two currencies stuck to a narrow range before the ECB announced a half-percentage point rate hike as promised, with markets pricing an 80.5% likelihood that the Fed will lift rates by a quarter point on March 22, CME’s FedWatch Tool showed.

U.S. and euro zone government bond yields rose as stock markets on both sides of the Atlantic rallied after an initial volatile trading reaction by markets to the ECB decision.

“The market is looking at the ECB, seeing a central bank facing market uncertainty and taking the hawkish decision that it had hinted at in earlier guidance, being driven by its inflation mandate and saying ‘the Fed might be able to follow that similar template,'” said Brian Daingerfield, head of G-10 FX strategy at NatWest Markets.

The ECB has raised rates at the fastest pace on record and the Fed at its quickest in four decades to curb inflation. Higher rates on U.S. government debt than other countries has fortified the dollar, as has a relatively strong economy.

But a rout in global markets after Silicon Valley Bank collapsed in the United States last week and a plunge in the share value of Credit Suisse this week threatened to upend the ECB’s plans to raise rates.

“If they didn’t do anything, if there was no hike, people would have been more panicked. They would immediately have started speculating what are they hiding?” said Simona Mocuta, chief economist at State Street (NYSE:) Global Advisors in Boston.

“It also gives a sense of continuity in this moment of mayhem. It’s a bit of an anchor, as policymakers should be at times like this,” she said.

The euro fell as much as 0.25% after the ECB’s decision but later reversed course, as did the dollar. The euro was up 0.38% to $1.0615 while the fell 0.258%.

Currency and other markets were broadly calmer on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence.

The bank’s shares had plunged as much as 30% on Wednesday.

That stability also helped the Swiss franc to strengthen, and the dollar at one point fell more than 1% against the franc to 0.9232, reversing some of its 2.15% surge on Wednesday – the largest daily gain since 2015.

Elsewhere, the safe-haven Japanese yen remained in favor even as markets calmed a little.

The Japanese yen weakened 0.04% to 133.47 per dollar as the U.S. currency slipped further from a nearly three-month high of 137.91 it hit on March 8.

Sterling was last trading at $1.212, up 0.46% on the day.

Currency bid prices at 3:24 p.m. (1924 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct Change High Bid Low Bid

Previous

Session

Dollar index 104.3600 104.6500 -0.26% 0.841% +104.7500 +104.2000

Euro/Dollar $1.0617 $1.0579 +0.37% -0.91% +$1.0635 +$1.0552

Dollar/Yen 133.4700 133.4750 -0.01% +1.79% +133.8200 +131.7200

Euro/Yen 141.71 141.10 +0.43% +1.00% +141.9200 +139.1500

Dollar/Swiss 0.9289 0.9338 -0.52% +0.47% +0.9339 +0.9233

Sterling/Dollar $1.2122 $1.2056 +0.56% +0.25% +$1.2127 +$1.2029

Dollar/Canadian 1.3724 1.3767 -0.31% +1.29% +1.3787 +1.3722

Aussie/Dollar $0.6656 $0.6622 +0.55% -2.33% +$0.6668 +$0.6612

Euro/Swiss 0.9861 0.9871 -0.10% -0.34% +0.9882 +0.9800

Euro/Sterling 0.8758 0.8770 -0.14% -0.97% +0.8819 +0.8748

NZ Dollar/Dollar $0.6185 $0.6188 -0.02% -2.56% +$0.6188 +$0.6140

Dollar/Norway 10.7570 10.7550 +0.14% +9.74% +10.8710 +10.7250

Euro/Norway 11.4247 11.3739 +0.45% +8.87% +11.4830 +11.3728

Dollar/Sweden 10.5147 10.5835 -0.44% +1.03% +10.6160 +10.4979

Euro/Sweden 11.1625 11.2122 -0.44% +0.12% +11.2473 +11.1440

The U.S. dollar retreated in early European trade Thursday and the euro pushed higher as Credit Suisse’s move to bolster its financial position boosted risk sentiment.

At 03:55 ET (07:55 GMT), the , which tracks the greenback against a basket of six other currencies, traded 0.3% lower at 103.980, handing back some of the previous session’s 1% gain.

Credit Suisse (SIX:) announced late Wednesday to borrow as much as CHF 50 billion ($1 = CHF 0.9297) from the Swiss National Bank, strengthening its liquidity position.

Worries have been growing about the Swiss lender’s financial health for some time as it struggled with hefty customer outflows in the wake of a string of scandals. These came to head on Wednesday with its share price slumping to a record low as its main investor, Saudi National Bank, said it was unable to provide more funding to the lender.

The news of this credit line has boosted sentiment, soothing some concerns over an immediate collapse in the sector that had been hit hard by the three recent U.S. bank failures.

rose 0.4% to 1.0619, bouncing on the news, ahead of the European Central Bank’s latest policy-setting later in the session.

The ECB had previously signaled the likelihood of another interest rate increase of 50 basis points as underlying Eurozone remained elevated, but concerns about potential repercussions to the banking sector from such a hefty hike could prompt the policy makers to act more cautiously.

“The market will … take its cue from the European Central Bank today. Pushing on with a 50bp rate hike will prove difficult and we should expect more volatility immediately after the … decision,” said analysts at ING, in a note.

ECB President Christine Lagarde’s will also be of interest as she is sure to be asked how the central bank can balance efforts to deliver price stability while safeguarding financial stability.

The question is the same in the U.S., with the likely to hold back from increasing interest rates by an outsized 50 basis points next week, given the strain on the U.S. banking system.

Goldman Sachs has lifted its estimate of the odds of a U.S. recession to 35% over the next 12 months in response to increased uncertainty over the economic impact of bank stress, an increase from 25% previously.

Elsewhere, rose 0.3% to 1.2105, boosted by the improved risk sentiment. Also helping was Chancellor Jeremy Hunt’s comments in the budget on Wednesday that the economy was likely to shrink 0.2% in 2023, an improvement from the previous forecast for a 1.4% contraction.

fell 0.5% to 132.69, with the yen one of the best performers of the day. The risk-sensitive rose 0.6% to 0.665670, while edged 0.1% lower to 6.9007.