US Dollar faces hike after Federal Reserve's claim

Washington: The US Federal Reserve has indicated that the interest rate hike would continue to counter inflation for some time. This claim has caused the US Dollar value to jump compared to other currency rates. The Dollar has reached a 20-year-record hike in the Asian markets. The rise in the value of the US Dollar has impacted other elements. Besides, it has caused the Gold rates and Asian stock markets to decline. Meanwhile, financial institution Goldman Sachs has warned that the United Kingdom may face a lash of recession in the fourth quarter of this year.

Moreover, inflation has risen to record highs in Western countries, including the US. Most of the central banks, including the US, had started a session of increasing interest rates to prevent this flare-up. The US Federal Reserve has raised interest rates four times in the past five months. But even after that, the rate of inflation has not decreased. However, the central banks insist that the interest rate increase is the main weapon to control inflation. Federal Reserve Governor Jerome Powell stated that interest rate hikes would be maintained in the United States for the next few months. Powell’s statement has had a global impact.

On Monday, the value of the US dollar rose to a two-decade high. In Asian markets, the dollar index reached 109.44. The value of the Japanese yen, Chinese yuan and Indian rupee, major currencies in Asia, fell significantly. Following the Asian currencies, the value of the Euro and other currencies has also started to decline. In the Asian stock markets, the stock indices of Japan, South Korea and India fell sharply.

The impact of this has started to be felt in the American and European markets as well. The US stock indices, S&P 500 and Nasdaq 100 fell. Interest rates have also started to rise in European bond markets. Along with currency and stock markets, gold prices were also affected. Gold prices fell 0.6 per cent to 1,722 an ounce as the Dollar strengthened. This has been the lowest in the last month.

Meanwhile, a leading US financial institution, Goldman Sachs, predicted a recession in the United States. Besides, Goldman Sachs warned that the British economy would go into recession by the end of next year due to rising fuel and electricity prices. The British economy may decline by 0.6 per cent in the fourth quarter of this year, the US Treasury said. In an earlier report, Goldman Sachs had cited that the British economy would attain a growth rate of more than one per cent.