'US Tapering Imminent and Economic Slowdown Concerns' Dollar Value Hits Highest in 1 Year

[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 29th (local time) that the value of the US dollar rose to its highest level in a year.

The strengthening of the dollar is attributed to the Federal Reserve's (Fed) imminent tapering (reduction of asset purchases) and the preference for safe-haven assets amid concerns about economic slowdown. The dollar index, which shows the value of the dollar against six major currencies including the euro and yen, rose to 94.435 on the day, marking a fourth consecutive day of gains. The value of the dollar reached its highest level in over a year since September last year. In particular, it showed a strong trend by reaching its highest level against the Japanese yen since February last year.

Recently, with the rise in global energy prices, the increase in US Treasury yields, and concerns about economic slowdown piling up as negative factors, investment demand is pouring into the dollar, which is recognized as a safe-haven asset during economic uncertainty. Additionally, as expectations spread that the Fed will begin tapering around November and start raising the benchmark interest rate next year, the outlook for reduced dollar liquidity is interpreted as driving up the value of the dollar.

US bank Wells Fargo evaluated that the dollar index has room to rise an additional 2 to 3% going forward.

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