The dollar appreciated today to a new maximum of two decades, after the United States Federal Reserve raised its benchmark interest rate another 75 basis pointswithas expected by the market, and indicated more important increases in the cost of credit for the remainder of the year.
The Fed raised the rate by three-quarters of a percentage point, to a range of 3 to 3.25 percent.while new estimates indicate that borrowing costs will advance as much as 4.40 percent by the end of the year before eventually peaking at 4.60 percent in 2023.
The quarterly projections of the central bank calculate a slowdown in the growth of the United States GDPto 0.2 percent this year, to recover to a 1.2 percent expansion in 2023, well below output potential.
No Fed rate cuts expected until 2024.
The dollar index hit a new 20-year high of 111.63 units, in its comparison with a basket of even currencies, and added 1.1 percent in the afternoon, to 111.42 units.
The euro, the largest component in the dollar index, fell to a 20-year low, hitting $0.98. The European single currency was trading at $0.9837, down 1.3 percent on the day.
In front of yenThe dollar posted smaller gains against other currencies, adding 0.5 percent to 144.41 yen. Traders were wary of taking the dollar higher given the possibility of Bank of Japan intervention to support the yen.
In relation to the Mexican peso, the exchange rate interbank is located at 19.94 pesos per dollar, according to data from Bloomberg.
“Them Fed) have a short window to act aggressively and seem eager to take advantage of it,” said Jan Szilagyi, co-founder and CEO of Toggle AI, an investment consultancy.
“There is another reason to expect more hikes: people’s and market’s tolerance for tighter monetary policy is much higher with the unemployment rate below 4 percenta historical minimum”, commented.
MRA