On Monday, the US dollar climbed to its highest level in 20 years versus other major currencies after Federal Reserve Chairman Jerome Powell stated that interest rates will remain high for a longer length of time in order to contain runaway inflation.
The dollar index, which measures the value of the US currency against a basket of foreign currencies, reached 109.48, a record high not seen in two decades.
This has kept European currencies under pressure, despite the European Central Bank’s hawkish views, which have raised prospects of a rate increase in September.
In early European trade, the euro plummeted 0.25 percent to $ 0. 99415, near to its lowest level in 20 years, while the pound fell to its lowest level in two and a half years. The markets in London were closed due to a public holiday.
Powell said at a central bank conference in Jackson Hole, Wyoming, on Friday that the Fed will raise interest rates to the greatest level required to limit growth and will maintain them there for some time.
It is time to lower inflation, which has risen to more than three times the council’s aim of two percent.
In addition, US Treasury rates surged, with two-year bond yields reaching their highest level in 15 years at around 3.49 percent, helping to boost the dollar index.
The dollar surged 0.8% to 138.81 yen, its best level since July 21, while the yuan plummeted to a two-year low of 6.9321 per dollar.
The British pound dropped to its lowest level in two and a half years, $1. 1649, before sliding 0.5% to $1. 1676.
The dollar has reached its highest level in two decades.
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