The US dollar rose to a 20-year high against various currencies after the signal of the US Federal Reserve Chair Jerome Powell to keep interest rates high for the purpose of bringing down soaring inflation.
With the greenback’s strength pushing other major currencies to new lows and putting pressure on emerging markets counterparts, the dollar index scaled to a fresh two-decade peak of 109.44 in the Asia trade.
The dollar hit 138.88 against the Japanese Yen, highest since July 2021, while the Yuan fell to 6.93 per dollar. Sterling fell to a two-and-a-half year low of $1.1656 while the euro fell by 0.49pc to $0.99.
The moves extended dollar gains when Powell had warned that there would be some pain for households and businesses. Markets have been pricing in about a 76.5 percent chance of 75 basis point rate hike at the next Fed meeting to be held in September.
Despite potential for a big hike at the European Central Bank’s (ECB) September policy meeting, the Euro has also struggled with investors more focused on an energy crisis in the bloc.
The risk-sensitive Australian and New Zealand dollars were also weighed down because of the aggressive rate hikes around the world putting brakes on economic growth. The Australian dollar was down 0.7% to $0.68, while the Kiwi currency hit a new one-month low of $0.61.
In crypto currencies, Bitcoin remained below the $20,000 level as investor sentiment dipped, and was last down 3.89pc to $19,843.02.