Dollar Hits 7-Month High on Rate Hike Expectations

The value of the U.S. dollar has climbed to its highest level since last November, driven by the possibility of interest rate hikes by the U.S. Federal Reserve (Fed).

The Bloomberg Dollar Spot Index (BBDXY) jumped 0.4% on the 23rd (local time), closing at its highest level in seven months.

The Dollar Index (DXY), which measures the dollar's value against six major currencies, also remains strong, recording 101.443 as of 10:00 a.m. on the 24th (Korea Standard Time).

The strength of the dollar is attributed to the clear divergence between the Fed’s monetary policy direction and that of other major central banks.

Traders are pricing in expectations that the Fed will raise interest rates by 0.25 percentage points twice by early next year.

"There is room for the dollar to rise further," said Jordan Rochester, a strategist at Mizuho International. "The dollar tends to strengthen ahead of the Fed's rate hike phase, and the market is weighing the possibility that the rate hike cycle could begin this September."

Michael Ball, a macro strategist at Bloomberg Markets Live, analyzed, "A true breakout for the dollar will only be possible if Fed Governor Kevin Warsh actually raises rates, proving that this hawkish stance is not just the first act."

The Dollar Index has risen 1.7% so far this year.

This has been supported by increased demand for the dollar as a safe-haven asset, following the surge in international oil prices after the U.S. and Israel's attack on Iran in late February.
※ Please note: This article was translated by AI and may contain errors.