# Dollar soars to two-decade high as Putin shakes FX market ahead of Fed Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-21 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: Dollar Soars to New Heights Amid Putin Concerns Meta Description: The dollar index reaches 110.87 amidst safety concerns, as Putin's actions prompt investors to flee to the greenback while European currencies face URL: https://financedigest.com/dollar-soars-to-two-decade-high-as-putin-shakes-fx-market-ahead-of-fedhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-21t045700z2lynxmpei8k01ortroptp4global-forex-1736815179156-compressed.jpg) By Dhara Ranasinghe and Gertrude Chavez-Dreyfuss LONDON/NEW YORK (Reuters) – The dollar surged to a new two-decade high on Wednesday just ahead of another expected aggressive Federal Reserve interest rate hike, as investors fled for safety after a decision by Russian President Vladimir Putin to mobilize more troops for the conflict in Ukraine. Putin on Wednesday called up 300,000 reservists to fight in Ukraine and said Moscow would respond with the might of all its vast arsenal if the West pursued what he called its “nuclear blackmail” over the conflict there. The news propelled the dollar index, which measures the greenback’s value against six [major currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"), to 110.87 <=USD>, its strongest level since 2002. The [dollar index is up almost 16% this year](https://www.financedigest.com/dollar-creeps-up-in-subdued-start-to-new-year.html "Dollar creeps up in subdued start to new year") and set for its biggest annual surge since 1981. It was last trading at 110.71, up about 0.5% on the day. Most of the dollar moves today are Putin-related,” said Steven Englander, [head of global G10 FX research and North](https://www.financedigest.com/the-north-heads-south-to-mipim-en-masse-to-corner-new-real-estate-business-opportunities.html "The North heads South to MIPIM en masse to corner new real estate business opportunities") America macro strategy at Standard Chartered in New York.. When I look at my table, the five worst performing currencies are the [Swedish crown](https://www.financedigest.com/dollar-edges-down-from-six-week-peak-swedish-crown-jumps.html "Dollar edges down from six-week peak, Swedish crown jumps"), Polish zloty, Czech koruna, Hungarian forint and the euro. That’s more a Putin worry because of hints that [Russia might escalate the conflict in Ukraine and on what limits he puts](https://www.financedigest.com/russia-puts-iranian-satellite-into-orbit.html "Russia puts Iranian satellite into orbit") on the weapons they use. ![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/Dollar2109.jpg) European currencies bore the brunt of selling in foreign exchange markets as Putin’s comments exacerbated concern about the economic outlook for a region already hit hard by [Russia’s squeeze on gas supplies](https://www.financedigest.com/exclusive-kazakh-mcdonalds-shut-outlets-temporarily-after-halting-supplies-from-russia-sources.html "Exclusive-Kazakh McDonald’s shut outlets temporarily after halting supplies from Russia – sources") to Europe. The [euro fell to a two-week low](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") of $0.9885, within sight of two-decade lows touched earlier this month. It was last down 0.7% at $0.9901. [Sterling fell to a fresh 37-year low of $1.1304 and was last down 0.5%](https://www.financedigest.com/sterling-rises-0-5-as-dollar-takes-a-breather.html "Sterling rises 0.5% as dollar takes a breather") at $1.1335 \[GBP/\] Later on Wednesday, the Fed is [expected to lift interest rates by three-quarters of a percentage point for a third straight time and signal how much further and how fast borrowing costs may need to rise to tame inflation](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected"). The policy decision, due at 1800 GMT, will mark the latest move in a synchronized policy shift by global central banks that is testing the resilience of the [world economy and the ability of countries to manage exchange rate shocks as the value of the dollar](https://www.financedigest.com/world-stocks-cling-to-upbeat-mood-dollar-stalls.html "World stocks cling to upbeat mood, dollar stalls") soars. What the market is looking for is whether (Fed Chair Jerome) Powell says the Fed does not [know how far they have to go and they’ll go as far as they need](https://www.financedigest.com/g20-summit-what-you-need-to-know-now.html "G20 Summit: What you need to know now") to go,” said Standard Chartered’s Englander. If someone asks him whether he sees [rates going to 5% and he says he doesn’t see it, but doesn’t rule it out if that’s needed to get inflation down, then that would be really hawkish and means they’re opening up rates to an even higher](https://www.financedigest.com/dollar-jumps-as-powell-flags-higher-terminal-rate.html "Dollar jumps as Powell flags higher terminal rate") range than what the market anticipates. The Australian and New Zealand [dollars meanwhile plumbed multi-year lows](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation"). The Aussie [dollar hit](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") a trough of US$0.6655, its lowest since June 2020, while the New Zealand currency fell to US$0.5873, its lowest since April 2020. Against the battered yen, the dollar was up 0.2% at 143.97, holding off recent [24-year peaks](https://www.financedigest.com/resilient-u-s-dollar-soars-to-24-year-high-vs-yen-37-year-peak-vs-sterling.html "Resilient U.S. dollar soars to 24-year high vs yen, 37-year peak vs sterling") It was interesting to me that dollar/yen dipped on the news of the announcement, potentially indicating a return of the yen’s safe-haven credentials which have been absent for much of the year,” said Colin Asher, a senior economist at Mizuho [Corporate Bank](https://www.financedigest.com/post-crash-banking-regulation-is-transforming-the-world-of-corporate-lending-for-the-better.html "Post-crash banking regulation is transforming the world of corporate lending – for the better"). ======================================================== Currency bid prices at 10:42AM (1442 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 110.8300 110.1700 +0.61% 15.855% +110.8800 +110.1200 Euro/Dollar $0.9895 $0.9969 -0.74% -12.96% +$0.9975 +$0.9885 Dollar/Yen 143.9650 143.7100 +0.19% +25.07% +144.1950 +143.3500 Euro/Yen 142.48 143.28 -0.56% +9.34% +143.5900 +141.9300 Dollar/Swiss 0.9643 0.9640 +0.09% +5.78% +0.9683 +0.9622 Sterling/Dollar $1.1326 $1.1381 -0.46% -16.23% +$1.1384 +$1.1304 Dollar/Canadian 1.3401 1.3368 +0.25% +6.00% +1.3405 +1.3361 Aussie/Dollar $0.6658 $0.6691 -0.46% -8.38% +$0.6703 +$0.6655 Euro/Swiss 0.9540 0.9615 -0.78% -8.00% +0.9618 +0.9535 Euro/Sterling 0.8733 0.8760 -0.31% +3.98% +0.8769 +0.8721 NZ $0.5879 $0.5895 -0.25% -14.10% +$0.5906 +$0.5873 Dollar/Dollar Dollar/Norway 10.3010 10.3480 -0.80% +16.52% +10.4015 +10.2650 Euro/Norway 10.1968 10.3001 -1.00% +1.84% +10.3120 +10.1640 Dollar/Sweden 11.0034 10.8937 +0.20% +22.02% +11.0367 +10.8877 Euro/Sweden 10.8834 10.8619 +0.20% +6.39% +10.9247 +10.8596 (Reporting by Dhara Ranasinghe in [London and Gertrude Chavez-Dreyfuss in New York; Additional reporting by Lucy Raitano; Editing by Edwina Gibbs, Catherine Evans and Mark Heinrich)](https://www.financedigest.com/new-york-holds-top-spot-london-second-in-z-yen-financial-centre-survey.html "New York holds top spot, London second in Z/Yen financial centre survey") --- This blog is powered by Superblog. 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