AP

Dollar surges to 2-decade high as investors seek refuge

May 5, 2022, 8:07 AM | Updated: 12:26 pm

NEW YORK (AP) — The U.S. dollar’s value surged in April as investors sought refuge amid the Federal Reserve’s aggressive shift to fight rising inflation.

Rising inflation that has caused the biggest jump in prices in 40 years has spurred the Federal Reserve to aggressively raise interest rates, which increases demand for U.S. dollars. The U.S. dollar is also the world’s reserve currency and is considered a safe-haven in times of global economic stress.

The U.S. Dollar Index, which tracks the value of the dollar versus the Euro, Japanese yen and other major currencies, is at its highest level in two decades. The greenback will likely remain stronger than almost all currencies through this quarter, said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note to investors.

The dollar’s gains come as investors pull back from technology stocks because of worries about rising inflation. The Euro lost value relative to the U.S. dollar as Russia’s invasion of Ukraine ramped up fears that rising energy costs will worsen and crimp economic growth in the 19-country eurozone. Europe relies heavily on Russia for natural gas. The conflict has also made key food commodities like wheat and corn more expensive.

China’s strict COVID-19 lockdowns of Shanghai and Beijing are also reviving fears that the virus pandemic still poses a threat to the global economy. The International Monetary Fund cut its growth forecast for China’s economy because of the impact on commerce from lockdowns.

The stronger dollar has hurt corporate earnings. Roughly 40% of revenue from S&P 500 companies comes from outside the U.S., where the stronger dollar has cut into profits. Drug developer Biogen said part of its revenue decline outside the U.S. was due to the currency impact of a stronger U.S. dollar.

The role of traditional safe haven has been behind the recent surge in the U.S. dollar’s value, but a slowing U.S. economy is likely to put that into reverse this year.

“The direction of the dollar is, as always, very difficult to forecast in the short run. However, in the long run, these economic forces should prevail, pushing the greenback down,” said David Kelly, chief global strategist at JPMorgan Funds.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Police clear the area following a shooting at the Kansas City Chiefs NFL football Super Bowl celebr...

Associated Press

1 dead, many wounded after shooting at Kansas City Chiefs’ Super Bowl victory parade

One person died after 22 people were hit by gunfire in a shooting at the end of the Kansas Chiefs' Super Bowl victory celebration Wednesday.

7 days ago

This image from House Television shows House Speaker Mike Johnson of La., banging the gavel after h...

Associated Press

GOP-led House impeaches Homeland Security Secretary Mayorkas — by one vote — over border management

Having failed to impeach Homeland Security Secretary Alejandro Mayorkas the first time, House Republicans are determined to try again Tuesday.

8 days ago

Defense Secretary Lloyd Austin, right, and Kenya's Defense Minister Aden Duale, left, listen during...

Associated Press

Defense Secretary Lloyd Austin hospitalized with bladder issue

Defense Secretary Lloyd Austin has been hospitalized following symptoms pointing to an “emergent bladder issue."

10 days ago

Joel Osteen, the pastor of Lakewood Church, stands with his wife, Victoria Osteen, as he conducts a...

Associated Press

Woman firing rifle killed by 2 off-duty officers at Houston’s Lakewood Church run by Joel Osteen

A woman entered the Texas megachurch of Joel Osteen and started shooting with a rifle Sunday and was killed by two off-duty officers.

10 days ago

(Pexels photo)...

Associated Press

Baby in Kansas City, Missouri, dies after her mother mistakenly put her in an oven

An infant in Missouri died when her mother mistakenly put her down for a nap in an oven, a prosecutor said Saturday.

11 days ago

Former Arizona Department of Corrections boss Charles Ryan received probation on Feb. 9, 2024. (AP ...

Associated Press

Former Arizona corrections boss sentenced to probation over armed 2022 standoff with police

Former Arizona Corrections Director Charles Ryan was sentenced Friday to probation for his no-contest plea to a disorderly conduct charge stemming from a 2022 armed standoff at his Tempe home.

12 days ago

Sponsored Articles

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

...

FanDuel

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

Dollar surges to 2-decade high as investors seek refuge