US Dollar Jumps amid Investors Panic

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US Dollar Jumps amid Investors Panic
30 Apr 2022
min read

News Synopsis

The strong dollar on Thursday showed the latest rise in the greenback. It rose in all but two of the 20 trading sessions in April, putting the currency within the surprising distance of its 20-year high. This is 1.3% higher than it is now. Jumps beyond that will be the highest level in the index since 2002.

The strong dollar was one of the few bright spots in the market this year. Otherwise, it was hit by inflation, geopolitical concerns, and concerns about the US Federal Reserve's rate hike.

The dollar tends to work if investors abandon higher-risk investments and seek protection for assets that they consider safer. Its position as the world's reserve currency makes the dollar a particularly attractive paradise.

Higher interest rates also tend to support the dollar by making US investments more attractive to yield-seeking investors. Investors expect the Fed to aggressively raise rates this year to counter rising inflation. 

In comparison, the Bank of Japan reiterated its pledge to keep interest rates low despite rising inflation. Meanwhile, the European Central Bank is lagging behind the Fed in tightening monetary policy, ECB Governor Christine Lagarde said earlier this month.

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