The index, which measures the US dollar against a basket of currencies, has risen 8.6% this year, the most since 2015.
By the end of 2022, the US dollar had performed its best in seven years, thanks to the Federal Reserve’s aggressive tightening of monetary policy and concerns about global growth prospects. Reuters reported this on Friday, December 30.
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The index, which measures the US dollar against a basket of currencies, has risen 8.6% this year, the most since 2015. Today the index stands at 103.99.
The Fed has raised rates by a total of 425 basis points since March to stem rising inflation that has kept the dollar afloat for most of the year. But expectations that the central bank may not raise rates as high as previously feared led to the situation turning around. The US dollar index fell more than 7% this quarter.
The soft position of the Bank of Japan has led to the fact that the yen has fallen by more than 13% since the beginning of the year, which is the worst performance since 2013, to 132.47 per dollar. But the surprise change in control of BOJ bond yields last week led investors to bet that the central bank could completely reverse its controversial policies, triggering a recovery in the fragile currency.
The euro fell more than 6% year-on-year to $1.0656 under pressure from a combination of weak eurozone growth, Russia’s war with Ukraine and the Fed’s stance. The single currency fell below parity against the dollar earlier this year for the first time in nearly two decades.
The pound sterling is now worth $1.2053, ending the year with a fall of almost 11%, the worst since 2016.
Policymakers from the European Central Bank and the Bank of England have signaled further rate hikes next year in an attempt to tame inflation even at the risk of hurting their economies.
The Australian dollar fell nearly 7% for the year to $0.6778. The New Zealand dollar has fallen more than 7% since the start of the year, its worst performance since 2015, to $0.6330. Both currencies, which are often used as liquid substitutes for the Chinese yuan, will likely depend on how China’s post-pandemic reopening goes.
China’s reversal of its strict “COVID zero” policy this month has seen its healthcare system struggle to deal with a wave of infections, with countries imposing restrictions on travelers from China.
The offshore yuan fell nearly 9% year-on-year to 6.9701 per dollar, the worst annual performance since such data first became available in 2011.
It will be remembered that in December the US Federal Reserve slowed down the rate of increase in the base rate. At the same time, further rate hikes will be needed to eventually return inflation to the target level of 2%, according to the Fed.
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Source: korrespondent
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.