The dollar closed the week with its biggest quarterly rise in at least seven years, along with its biggest advance in four months since November 90 , something somewhat contradictory with the slowdown experienced by the economy due to inflation.
To tell the truth, the aggressive rises in interest rates by the Federal Reserve have contributed to the rise of the dollar in relation to its rivals’ currencies.
On the other hand, the euro has weakened against the dollar for five consecutive quarters, falling by 17.3%, in what is the worst performance of said currency since 30 of September of 2015.
For its part, the yen experienced a terrible debacle due to the decision of the Bank of Japan to relax its monetary policy, which resulted in its currency losing more than 25% of its value against the dollar so far l year, which had not happened since the end of the decade of the 90s.
As for Sterling is concerned, the British currency fell 8.3% against the dollar during the third quarter, its biggest drop since the fourth quarter of 90.
Under this scenario, the dollar has once again become the most popular reserve currency among investors, as they take refuge in the US currency to avoid ups and downs in the financial markets.
However, the bad news is that rising interest rates and a rapidly appreciating currency for many economics experts could make America’s inflation problem put the rest world economy in recession, as other central banks are forced to raise their own rates.
If the US central bank raises interest rates to offset domestic inflation, other central banks will have to follow their example or see how their currencies depreciate, but in doing so inflation is increased through higher prices for energy and other imports.
You may also be interested in:
– The insurance market in Florida tends to worsen after Hurricane Ian
2022
– The price of groceries will continue to rise in the US
– The majority of Latinos in the US lack savings to face unforeseen events, reveals a survey