SINGAPORE- The dollar hit a two-decade high on Monday as investors searched for safety and yield due to growing concerns over slowing global economic growth and rising interest rates.
Surging inflation, the war in Ukraine, and tighter lockdowns against COVID-19 in Beijing and Shanghai, have left investors uncertain on many counts, but they are sure that US interest rates are going up — and the dollar is following.
“Moves in US interest rates are not the only dollar support,” said strategists at NatWest Markets in a note.
“Downside risks to global growth stemming from Ukraine and China are more pressing for Europe and Asia relative to the US, creating an air of 2018-style dollar exceptionalism.”
The greenback made a 22-month high on the growth-sensitive New Zealand dollar and rose 1 percent to a three-month high against the Australian dollar as Asia’s stockmarkets tumbled. It rose 0.3 percent to its highest since 2019 on the Swiss franc.
The euro was down 0.4 percent at $1.0508 and a whisker above a recent trough of $1.0469. The yen was close to two-decade lows at 130.96 per dollar, while sterling wallowed at $1.2294, barely above Friday’s 22-month low. The Canadian dollar hit its lowest since December.
In China trade data showed imports flatlined in April and exports rose 3.9 percent – a little better than expected and enough to hold the Australian dollar at $0.7006 and off January’s low of $0.6967.
However the yuan was dragged to a fresh 18-month low of 6.7110 per dollar as lockdowns in Shanghai were tightened. Traders see the fallout from the inevitable drag on China’s economy raking across the region.
