The dollar continues with an upward trend and reached a maximum appreciation of the last 20 years when compared to its peers, under the DXY index, which measures the North American currency once morest six others: euro, Swiss franc, Japanese yen, Canadian dollar, pound sterling and Swedish krona.
So far this year, the index has risen more than 14% and today stands at around 109 points, a level not seen since 2002.
The US currency has risen since the beginning of the year following the start of the conflict in Ukraine and with the tightening of monetary policy around the world to curb inflation, especially by the Federal Reserve (Fed).
In fact, the dollar continues to gain strength among its peers on expectations that the Fed will not budge on US interest rate increases, as Jerome Powell emphasized at the annual Jackson Hole symposium.
“It will be relevant how agents’ expectations evolve following Powell’s speech at Hackson Hole, where in part he reiterated a slightly Hawkish message in which he highlighted the need to maintain a restrictive monetary policy for a longer time, this in order to achieve that inflation converges towards its target level of 2.0%. On the other hand, he pointed out that growth below its trend and a less strong labor market in the coming months would be decisive to meet said objective,” said Gabriel Granados, senior professional of economic investigations in the Agrarian Bank.
The rise of the currency once morest its peers also shows concern regarding the increase in energy prices in Europe and its effects on inflation and a possible recession in the bloc.
In fact, German inflation accelerated to its highest level in almost 50 years in August, surpassing a high set just three months earlier, due to buoyant energy prices. This reinforced calls for an interest rate hike when the European Central Bank meets next week.
“Everything points to a stronger dollar,” Christian Kopf, head of fixed income at Union Investment, told the Financial Times. “The dollar is independent of energy imports and is not as affected by the increase in energy prices that we have seen particularly in Europe.”
ECB Governing Council member Klaas Knot said the bank should continue to raise interest rates rapidly as inflation in the currency bloc is likely to remain elevated for the foreseeable future.
The dollar continues to rise consecutively, while, according to Bloomberg data with the spot movement, so far this year the euro has lost 12.1%, the pound sterling 14%, the Japanese yen 17%, the Swiss franc 6, 8%, the Canadian dollar 3.5% and the Swedish krona 15.23%.
The currencies that fell the most once morest the US currency were the Sri Lankan rupee (-44.2%), the Ghanaian cedi (-38.2%), the Lao kip (-27.4%) and the Turkish lira ( -26.9%).
As for the Latin American currencies, the ones that lose the most are the Argentine peso (-25.88%), the Colombian peso (-7.7%) and the Chilean peso (-3.85%).
