London: The US dollar is enjoying its longest winning streak in nearly nine years, CNN reported.
The greenback was heading for its eighth-straight week of gains against a basket of other major currencies on Friday, its best run since winter 2014-2015. It has gained 5 per cent since mid-July, CNN reported,
The rally comes after months of volatility, fueled by concerns that the dollar may be losing its status as the world’s reserve currency. Speculation about the potential de-dollarization of global trade rose again last month after the Chinese-led expansion of the BRICS group of nations to include major oil producers, such as Saudi Arabia.
“Rumors of the US dollar’s demise continue to be greatly exaggerated,” James Athey, investment director at Abrdn, an asset manager, told CNN.
The US Dollar Index, which now stands at its highest level in six months, has been buoyed by a slew of positive economic data from the United States in recent weeks — fueling expectations that the Federal Reserve will keep interest rates higher for longer. Higher interest rates tend to boost the value of a country’s currency by attracting more foreign capital, as investors anticipate making bigger returns, CNN reported.
Meanwhile, storm clouds have gathered over the economies of China and Europe.
“The US economy continues to demonstrate remarkable strength, while matters in China and Europe, in particular, seem to be descending into a much more recessionary place,” Athey added.
The US unemployment is hovering near its lowest level in 50 years. Hiring remains solid, having notched its 32nd consecutive month of growth in August. And wages, when adjusted for inflation, are rising, CNN reported.