The Federal Reserve ’s interest rate hike promotes the great strengthening of the dollar

The spread between the Fed's continued rate of interest rate hikes has exacerbated the market's concerns about economic prospects and promoted the continued rise in the US dollar. At the same time, market participants are not optimistic that other countries' interest rate hikes or intervention in the market can continue to stabilize the local currency. The US dollar performs strongly under factors such as monetary policy, geopolitics, economic performance, and market risk aversion.

On the 21st, the Federal Reserve raised 75 basis points for the third consecutive time, driving the US dollar to rise. Data show that the US dollar index rarely increased by 1.65%on the 23rd. On the day, the city of exchange markets closed at 113.1890, rising to 20 years.

Preliminary data released by S & P Global on the 23rd shows that the comprehensive index of the euro zone manufacturing and service industry purchasing managers in September continued to decline. The economic recession prospect of the euro zone fell 1.5%to the US dollar exchange rate to 1 to 0.97 on the day, refreshing the euro exchange rate to the US dollar exchange rate in the past 20 years.

As the British government announced a series of measures, including large -scale tax cuts on the 23rd, the market was worried about the British government's ability to manage liabilities in the British government, and then sold British Treasury bonds.

As the Fed and the US dollar dominate the global currency market, most countries take the Fed's monetary policy as an important consideration factors when formulating their national monetary policy. The monetary policy brought by the Fed's radical interest rate hike has rapidly shifted to force many countries to follow the Federal Reserve to raise interest rates in order to maintain the macroeconomic stability. The local currency is difficult to work.

In order to suppress inflation, the Swedish central bank announced on the 20th that the benchmark interest rate increased by 100 basis points to 1.75%. This is the maximum rate of benchmark interest rates since 1993. Subsequently, the Bank of Japan decided to maintain a loose monetary policy unchanged, but the Ministry of Finance of Japan rarely directly intervened in the foreign exchange market to prevent the yen from continuing to depreciate. The Swiss Central Bank raised 75 basis points on the 22nd, and the Bank of England raised interest rate hikes 50 basis points on the day.

The market believes that the trend of the depreciation of the local currency depends on the stop of the Fed's monetary policy steering or interest rate hike.

The Bank of America's Global Research Department said that the Bank of England's interest rate hike is unlikely to reverse the pound. Structural deficits and Brexit are likely to continue to make the pounds under pressure, and it is difficult to rebound quickly.

The Global Research Department of the Bank of America also stated that due to the differentiation of the US -Japan monetary policy and regular account imbalances, unilateral intervention is unlikely to reverse the rise of the US dollar to the yen exchange rate.

Burendan McKenner, an economist in the Wells Fargo Securities Company, said that as long as the trend of monetary policy of Japan and other economies is still different, the yen will be weakened further in the next three to six months or even longer.

Commercial Bank of the Netherlands stated that, in view of the European energy crisis that makes European high -volatility currencies such as Sweden Cran, the Swedish Central Bank tightened the monetary policy in the short term will make it difficult for Sweden to strengthen.

Analysts believe that the Fed's radical interest rate hike policy, geopolitical tension and global economic prospects are dim and heavy to avoid risk avoidance, and will bring support to the US dollar, resulting in the US dollar on some major currency exchange rates may still reach a new high in the near future.

Matt Weiller, director of the global research team of the online brokerage agency, said that the British economy has become more risk of stagnation in the next quarter than the US economy. If energy prices continue to rise or inflation, the European mainland economy will face a serious decline, which may accelerate the process of the British exchange rate to the US dollar to a parity process.

For emerging markets, the Bank of America's Global Research Department believes that there is no chance to see the opportunity of currency in emerging markets. The rise in financing costs and the slowdown of global growth is not optimistic for emerging market currencies. At the same time, geopolitical risks also put pressure on the currency of emerging markets. (Xinhua News Agency reporter Liu Yan)

- END -