Investors around the world will be watching closely to see if the U.S. In September of 2022 the Dollar Index was up 20% on the year reaching a high of 114.8, but has since retreated and given back more than half its gains for this year so far. dollar has surged for much of 2022, its rally has started losing steam in the final months of the year. Europe continues to face an ongoing energy crunch with the Russia-Ukraine conflict nearby, while China’s zero-COVID policies have hampered the country’s manufacturing sector, as well as other industries. economy has remained resilient with the fewest risks on its horizon. Lastly, compared to many other global economies, the U.S. treasuries, making them a more attractive alternative for investors.Īt the same time, falling equity prices (especially in the technology sector) only further incentivized investors to pull out of riskier equity markets into the safety of the dollar. dollars becoming a more scarce and valuable yield-bearing asset.Īs interest rates have risen, so have yields for savings accounts and fixed-income securities like U.S. The rapid raising of interest rates by the Federal Reserve and tightening of their balance sheet has resulted in U.S. Dollar’s Strength in 2022Ī variety of factors have contributed to the U.S. Along with this, Canada has benefitted from surging crude oil prices in 2022, exporting the majority of its crude oil across its southern border to America. dollar since 2021, largely due to the financial and political stability of those nations. The Swiss franc and Canadian dollar have been the most resilient major currencies against the U.S. At the yen’s lowest point this year in October, the currency breached 24-year lows, resulting in the Bank of Japan intervening with $42.8 billion to support the country’s falling currency. However, the Japanese yen was the major currency hit hardest, having fallen more than 25% since the start of 2021. CurrencyĢ022 YTD Returns as of December 14th 2022. dollar) in September and October of 2022, before recovering with a 5.3% rally in November. One of the currencies hit hardest is the euro, which briefly fell below parity (meaning the euro was worth less than one U.S. Dollar and Major Currencies’ Returns in 2022Īs shown in the graphic above, the past two years have seen nearly every major currency lose value against the U.S. dollar in the past two years using price data from TradingView. This graphic visualizes almost 50 years of the Dollar Index’s returns along with the decline of major currencies against the U.S. The greenback has provided exceptional stability, with almost every currency around the world declining against the U.S. dollar has been a safe haven for investors. In a highly volatile and difficult year for many currencies and equities, the U.S. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week. Incidentally, because of its stability, the German mark was also considered the reserve currency for the intra-European economy before the introduction of the euro.Visualizing Currencies’ Decline Against the U.S. In Southeast and Far Asia, the Japanese yen is of enormous importance, but is slowly losing its significance due to its original circulation and is ceding its role to the Chinese renminbi. Although it still has a share of "only" 16 percent in terms of international use, it is gaining acceptance in more and more economies and also exhibits greater stability.ĭepending on the interpretation of the term reserve currency, other currencies are also regarded as such: The British pound has traditionally played a strong role in the countries of the British Commonwealth. Since 2002, the euro has also increasingly been seen as a reserve currency. The dollar has enormous influence, accounting for 63 percent of global foreign exchange reserves (end of 2017). dollar has been considered a reserve currency since World War II because, for example, oil prices are always calculated in dollars and numerous other currencies have pegged themselves to the U.S. Reserve currencies A reserve currency is a currency that is also used to a particular extent as a means of payment beyond its country of origin.
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