By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – The dollar surged to a fresh two-decade high on Wednesday after the Federal Reserve raised interest rates by another 75 basis points, as expected, and signaled more large increases at its upcoming meetings.
The Fed’s new projections showed its policy rate rising to 4.4% by the end of the year, before peaking at 4.6% in 2023 to curb uncomfortably high inflation. Rate cuts are not expected until 2024.
The hit a fresh 20-year high of 111.63 and was last up 1.1% at 111.42.
The euro, the largest component in the dollar index, dropped to a 20-year low, hitting $0.9810. Europe’s single currency last changed hands at $0.9837, down 1.3%.
Against the yen, the dollar posted minor gains compared to other currencies, rising 0.5% to 144.41 yen. Traders were wary of pushing the dollar higher given the threat of Japan intervention to boost the yen.
“They (the Fed) have a brief window to act aggressively, and they seem eager to use it,” said Jan Szilagyi, co-founder and CEO of Toggle AI, an investment research firm.
“There is another reason to frontload the hikes. Public and market tolerance for tighter monetary policy is far higher with the unemployment rate below 4%, a historic low.”
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Currency bid prices at 2:27PM (1827 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 111.2500 110.1700 +0.99% 16.294% +111.6300 +110.1200
Euro/Dollar $0.9851 $0.9969 -1.17% -13.34% +$0.9975 +$0.9810
Dollar/Yen 144.3550 143.7100 +0.45% +25.39% +144.6950 +143.3500
Euro/Yen 142.25 143.28 -0.72% +9.15% +143.5900 +141.8900
Dollar/Swiss 0.9670 0.9640 +0.43% +6.13% +0.9699 +0.9622
Sterling/Dollar $1.1285 $1.1381 -0.83% -16.54% +$1.1384 +$1.1237
Dollar/Canadian 1.3431 1.3368 +0.46% +6.22% +1.3445 +1.3361
Aussie/Dollar $0.6637 $0.6691 -0.78% -8.67% +$0.6703 +$0.6622
Euro/Swiss 0.9525 0.9615 -0.94% -8.12% +0.9618 +0.9517
Euro/Sterling 0.8726 0.8760 -0.39% +3.90% +0.8769 +0.8712
NZ $0.5857 $0.5895 -0.63% -14.42% +$0.5906 +$0.5844
Dollar/Dollar
Dollar/Norway 10.3355 10.3480 -0.07% +17.38% +10.4015 +10.2650
Euro/Norway 10.1887 10.3001 -1.08% +1.76% +10.3120 +10.1640
Dollar/Sweden 11.0499 10.8937 +0.25% +22.53% +11.0974 +10.8877
Euro/Sweden 10.8888 10.8619 +0.25% +6.35% +10.9247 +10.8596
