This year, the US dollar has once again shown an unprecedented rise against other currencies. Minor currencies suffered even greater losses compared to the major ones. Notably, all major currencies dropped against the greenback, but the euro and the yen are among the main losers.
The fact is that in the market, every currency has its real value. Investors have to pay for every choice they make. This year, they have been mainly choosing the US dollar. In this light, the greenback added 13% against the euro, 15% against the pound sterling, and as much as 20% against the yen. Such a large-scale appreciation of the US dollar has a negative influence on the financial institutions of Europe, Japan, and the UK. Their national currencies have been falling simultaneously. Analysts suppose that the greenback’s popularity could be explained by the Fed’s competent actions and growing doubts about global economic stability.
Being a traditional safe-haven asset, the greenback has been gaining value amid investors’ concerns about the Fed’s measures taken to combat inflation. Thus, the Federal Reserve has raised the benchmark rate by 2.25 percentage points since March. Now, the target level is 2.25%-2.50%. The regulator is expected to continue its monetary policy tightening until March 2023. A slowdown in the global economy has also been making traders shift their attention to safe-haven assets, including the greenback.
