Tuesday, June 17, 2025

Dollar surges

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NEW YORK- The dollar extended its advance against a basket of currencies, building on the gains logged after the US Federal Reserve earlier this week surprised markets by signaling it would raise interest rates and end emergency bond-buying sooner than expected.

The dollar index, which tracks the greenback against six major currencies, was up 0.37 percent at 92.213, its highest since mid-April. That puts the index on pace for a weekly gain of nearly 2 percent, its best weekly jump in about 14 months.

The jolt to foreign exchanges was triggered on Wednesday by Fed forecasts showing 13 of the 18-person policy board saw rates rising in 2023, versus only six previously, with the median board member tipping two hikes in 2023.

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Investors’ risk appetite took another hit after St. Louis Federal Reserve President James Bullard said on Friday that the US central bank’s shift this week toward a faster tightening of monetary policy was a “natural” response to economic growth and particularly inflation moving quicker than expected as the country reopens from the coronavirus pandemic.

“I think this is a direct echo of the 2013 taper tantrum. You are seeing a perceived shift in the Fed’s reaction function driving investors into the safety of the US dollar,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

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