The Dollar Index reached a record high in 20 years amid volatility in the market over the Fed’s rate hike and quantitative tightening, Russia’s war in Ukraine, rising inflation and China’s lockdown.
The Dollar Index rose to 104.187 on May 9, 2022, a level not seen since 2002. The index was 8.02% higher this year.
Today, the dollar gained nearly 1% against the Chinese yuan, 0.40% against the Japanese Yen, 4.60% against the Russian ruble, but down 0.36% against the sterling and 0.38% against the euro.
The U.S. Federal Reserve decided to increase its policy rate by 0.50bps last Wednesday, which was the most aggressive move made in a single hike since May 2000.
The Bank of England followed suit on Thursday by raising its interest rate by 0.25bps to a full percentage point, its highest rate since 2009.
The U.S. will report its April inflation data on Wednesday local time in which economists’ consensus indicated a slow down of the consumer price index from 8.5% in March to 8.1%, which is still at a high level of 40-year high.
Meanwhile, Russia continues its special operations in Ukraine despite further sanctions from the U.S. by banning American accounting and consulting firms from working in Russia, as the Group of Seven leaders stepped up pressure on President Vladimir Putin by pledging to halt oil imports from his country.
As for China, export growth in April slowed to 3.9% in dollar terms from a year earlier, compared to an increase of 14.7% in March, customs data showed Monday. This marks the weakest growth pace since June 2020. On the other hand, imports were unchanged in April after sliding 0.1% in the previous month.
Chinese Premier Li Keqiang on Monday warned of a complicated and grave employment situation as Beijing and Shanghai tightened restrictions on their residents to curb the resurgence of Covid-19 outbreak, following its zero-covid policy.