The dollar hit a 20-year high on the back of the Federal Reserve’s decision to raise interest rates (Getty)
It seems that the phenomenon of the strong dollar will accompany us for many years, The American currency It is getting stronger day after day, deriving this from several factors, most notably the interest rate, which has become the highest since 2008, the influx of money into Wall Street markets, and the strong demand for bond And US Treasury bills due to the high yield, the increase in geopolitical risks around the world, and the escalation of economic crises, especially inflation and energy.
More importantly, it is weak coins Global competition, including the euro and the pound sterling, even the yen, which also rolled to its lowest level in 24 years, which pushed central bank The Japanese government intervened for the first time since 1998 to support it against the dollar and stop its bleeding and continuous decline.
Despite his crises, US economy In the forefront of which is the increase in the inflation rate, but the dollar reached its highest level in 20 years, supported by the Federal Reserve’s decision to increase the rate of inflation interest rateIt is expected to strengthen in the coming period with the continuation of the monetary tightening policy aimed at combating high inflation.
The dollar reached its highest level in 20 years, supported by the Federal Reserve’s decision to raise interest rates
At a time when the ink of the Federal Reserve’s decision to increase interest rates by 0.75% to 3% and 3.25%, compared to about zero last March, reports emerged from reputable investment banks that expect to continue the rate increase policy in the coming months, and even reach the level of 5 % by next March and maybe more, which is expected by two of the largest global banks, namely Bank of America and Deutsche Bank of Germany.
Indeed, a number of large international investors went even further, expecting a large jump in the dollar’s return that it had not reached before, as expected by investor Mark Mobius, who said a few days ago that the Fed may raise interest rates to 9%, in the context of the battle against inflation, which is A price that paralyzes the American economy, drowning the economies of emerging and developing countries in debt seas, currency collapse, inflation, and possibly bankruptcy and financial stumbling, especially since these countries depend largely on external borrowing to bridge financing gaps and budget deficits.
So, the interest rate on the dollar does not stop at this high level after the Federal Reserve painted a foggy and possibly bleak picture of the American economy in a statement issued after the bank’s meeting on Tuesday and Wednesday, as it sharply lowered its forecast for economic growth in the United States, while raising its estimates of the unemployment and inflation rate. .
The Federal Reserve may raise interest rates to 9%, in the context of the battle against inflation, a price that paralyzes the American economy
He also expected GDP growth of only 0.2% this year, and reduced his vision for economic growth in the next two years to 1.2% and 1.7%.
The Fed raised its forecast for the unemployment rate this year to 3.8%, and also expected the unemployment rate to reach 4.4% in the next two years. Regarding inflation, the PCE price index is expected to rise by 5.4%.
The US economy is headed towards stagflation, with rising prices and an increase in the cost of living and economic pain for millions of American businesses and families by increasing the cost of borrowing on homes, cars and credit cards.
As long as the largest and most important economy in the world is not only sneezing, but is expected to bleed heavily, the dollar will continue to shine, and here say peace for emerging and developing market countries that depend on external borrowing, as they will plunge into economic crises, market depression, corporate bankruptcy, and collective failure.