Forex

The Dollar Rises As Central Banks Prepare To Tighten Policy

The dollar rose in Asia on Wednesday morning as central banks worldwide are likely to tighten policy to keep inflation in check. By 12:23 p.m. ET, the US Dollar Index measures the dollar’s value against a basket of other currencies; it rose from 0.28 percent to 102.60. (4:24 AM GMT). The USD/JPY exchange rate increased by 0.40 percent to 133.12. The yen has continued to fall after hitting a 20-year low. The Bank of Japan (BOJ) shows no signs of abandoning its ultra-easy monetary policies. Japan’s economy, on the other hand, appears to be improving. According to government statistics issued earlier in the day, Japan’s gross domestic product (GDP) declined 0.5 percent year-on-year in January-March, which was lower than the first estimate of a 1.0 percent decrease revealed last month.

Fluctuations in Currency Markets

The Australian dollar declined 0.33 percent to 0.7204, while the New Zealand dollar fell 0.39 percent to 0.6464. On Tuesday, the Reserve Bank of Australia (RBA) announced an unexpectedly large rate rise. It raised interest rates to 0.85 percent, above Investing.com’s projection of 0.60 percent. The USD/CNY exchange rate rose 0.04 percent to 6.6737, while the GBP/USD exchange rate fell 0.16 percent to 1.2568. The 10-year yield in the United States remained below 3%.

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On Thursday, the European Central Bank (ECB) will convene and announce its policy decision, largely expected to pave the way for future rate rises. According to US Treasury Secretary Janet Yellen, inflation will keep growing. The Biden administration’s budget proposal is likely to raise this year’s 4.7 percent inflation prediction. The prognosis for the global economy remained bleak. Due to rising commodity prices, supply interruptions, and central bank interest rate hikes, the World Bank lowered its global GDP forecast to 2.9 percent from 4.1 percent in January. Investors are now searching for fresh signals on the Fed’s interest rate rise path in Friday’s consumer price index in the United States.

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