The US dollar climbed to its highest level in two weeks against a basket of major world currencies on Monday. The dollar is mainly supported by escalating tensions between Russia and Ukraine, another factor is also the expectation that the Fed will take a decisive action against forty-year inflation.
According to Washington, Russia could launch an invasion of Ukraine at any time. Ukrainian President Volodymyr Zelensky called on citizens to fly flags on buildings and sing the national anthem together on Wednesday, 16 February. The US dollar strengthened against a basket of world currencies shortly after the call to its highest level in two weeks.
It gained especially against the euro, which weakened by 0.4 per cent to 1.1301 dollars per euro. The dollar also strengthened slightly against the Japanese yen, remaining virtually flat against the Swiss franc on Friday.
“The clear driver of the dollar’s strengthening is the tensions in Ukraine. Markets perceive risks and so a higher degree of volatility between currencies can be expected,” Karl Schamotta, chief strategist at Global Payments, told Reuters. Investors are also expecting a vigorous Fed action against inflation in the form of a higher-than-previously-anticipated rise in interest rates.
