US Dollar records highest level in two decades

Washington: The US dollar has reached its highest level in the last two decades. Compared to the dollar, the Chinese currency, Yuan has reached the bottom and recorded the lowest level. The changes recorded in the currencies of the world’s first and second largest economies are significant. With the US Federal Reserve raising interest rates and signalling further interest rate hikes, international investors seem to have turned to the dollar. The value of the British Pound, Euro and Japanese Yen has also fallen due to this. The impact of this has also been felt in international stock markets. Besides, indices in Asia and Europe have fallen by one to three per cent.

Moreover, inflation has risen to record highs in the West including the United States. Most central banks, including the United States, started raising interest rates to prevent this flare-up. The US Federal Reserve has raised interest rates four times in the past five months. But despite that, the rate of inflation has not reduced. However, the central banks insist that the interest rate increase is the main weapon to control inflation. A few days ago, Federal Reserve Governor Jerome Powell, announcing a new rate hike, warned that interest rate hikes in the United States would continue for the next few months.

Furthermore, there is uncertainty and restlessness among the investors; thus, they have turned to the US Dollar. On Wednesday, the value of the US dollar rose to a two-decade high. In international trade, the dollar index rose 0.5 per cent to 114.78. While the US dollar strengthened, other major currencies of the world faced a decline. China’s Yuan, the world’s second-largest economy, fell to a 12-year low. In Wednesday’s transactions, one dollar was trading as high as 7.2386 yuan. This is the historic decline since the introduction of the Chinese Yuan currency on the international stage.

Along with the Yuan, Japan’s Yen and the Indian rupee also depreciated. On Wednesday, transactions were recorded at 144.7750 Japanese Yen per US dollar. Japan’s central bank was forced to intervene last week after the Japanese yen crossed the 145 level against the dollar. The ‘Euro’ currency of European countries and the British Pound Sterling also fell in value. 0.955 euro to one dollar is the lowest level in two decades. It was reported that the British pound fell to 1.032. Analysts have predicted that the fall of the Euro and the British Pound will continue for some time to come.

The decline in currencies was also reflected in international stock markets. Major indices in Europe and Asia fell between one and three per cent. Sources informed that some indices have come down to the year’s lowest levels.