Dollar Touches 20-Year High As Monetary Policies May Control Rising Inflation


Dollar Touches 20-Year High As Monetary Policies May Control Rising Inflation

Concerns that stronger monetary policies to combat rising inflation would harm the global economy lowered risk aversion and pushed traders into the safe-haven currency, driving the dollar to new two-decade highs.

Consumer price rise in the United States has slowed dramatically, indicating that inflation has likely peaked.

The dollar benefited as the data reaffirmed predictions for more aggressive interest rate hikes by the Federal Reserve, and investors were concerned that central bank tightening might hinder global development.

Asian equities sank to a nearly two-year low, European stocks plummeted, and oil prices fell 2%. Fears that the crisis in Ukraine and growing energy prices could push the eurozone into recession kept the euro under pressure.

As hawkish Federal Reserve discourse remained to impact the Japanese currency, the yen climbed 1% against the dollar, although it was still close to its lowest level since 2002.

The negative risk sentiment was exacerbated by the gloomy news about China’s Covid issue. Two additional illnesses have been recorded in Shanghai, delaying the end of the lockdown.

A Bank of Japan policymaker dismissed the idea of using interest rate hikes to fight severe yen declines, saying it was improper to adjust monetary policy to manage exchange rates.

As refiners tried to emulate Russian crude supplies, at least three boats carrying crude oil from US emergency stocks sailed for Europe in April.

Since Russia’s invasion of Ukraine, new versions from the Strategic Petroleum Reserve (SPR) have been made to address supply shortfalls and lower fuel prices. Last fall’s release was focused primarily on lowering growing fuel prices in the United States.

Even with weaker output from sanctions-hit Russia, the world will not run out of oil, the International Energy Agency (IEA) stated on Thursday, in a U-turn after predicting a worldwide supply shock.

According to the Paris-based organization, the economic impact of additional restrictions on Russian energy being considered by the European Union could be modest.

Around a million BPD of Russian oil was locked in last month due to slowing product exports and decreased domestic demand.

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