The U. S. dollar hit a two-decade high on Monday, responding to Federal Reserve Chairman Jerome Powell’s comments that the central bank will continue to tackle inflation “forcefully”—signaling further interest rate hikes.13.5%. That is the amount by which the value of the U. S. Dollar has appreciated since the start of 2022. In a speech on Friday, Powell indicated that the Federal Reserve will continue with its aggressive rate hike plan as it works to curb record-high inflation levels, but warned that the process would not be painless. Powell expects the Fed’s moves will lead to a “sustained period of below-trend growth” which will cause “some pain” for households and businesses. The speech once again raised fears of a recession and caused both the S&P 500 and Nasdaq to slump by more than 3%. One key positive of a stronger dollar is that it may help ease inflation as imports of goods and services become cheaper. One key positive of a stronger dollar is that it may help ease inflation as imports of goods and services become cheaper. The U. S. imports more than it exports and in June it had a trade deficit of $79.6 billion. The euro fell below parity with the dollar for the second time this year last week and its value has since remained below the U. S. currency. According to foreign exchange tracker XE, the euro is valued at $0.993 as of early Monday morning. The euro’s slide was largely driven by energy concerns amid a lingering threat of Russia cutting off natural gas supplies to the eurozone. Recession Watch: Fears Return As Fed Warns Americans Of ‘Some Pain’ As Economy Braces For More Job Cuts (Forbes)Dollar hits 20-year high as markets hunker down for higher rates for longer (Reuters)
All data is taken from the source: http://forbes.com
Article Link: https://www.forbes.com/sites/siladityaray/2022/08/29/us-dollar-hits-two-decade-high-heres-what-that-means/
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