Dollar's Highest Surge in Nine Years... "More to Come Next Year"

The value of the Dollar has shown the highest surge in nine years due to the strong U.S. economy and the anticipated tariff policies of President-elect Donald Trump.

According to Bloomberg on the 28th (local time), the Bloomberg Dollar Spot Index, which measures the value of the Dollar against 10 major currencies, rose 7.4% this year up to the 27th, marking the highest increase since 2015 (9.0%).

This index rose 4.8% and 6.2% in 2021 and 2022, respectively, but turned to a 2.7% decline last year and has reversed to a significant rise this year.

As central banks lowered benchmark interest rates in response to economic slowdowns, all major advanced economies' currencies weakened against the Dollar.

This year, the Japanese Yen, Norwegian Krone, and New Zealand Dollar fell more than 10% against the Dollar, showing the poorest performance among the G10 countries.

The Euro fell 5.5% to $1.04 per Euro.

Barclays' foreign exchange strategist Skylar Montgomery said, "The main pillar supporting the Dollar's strength this year was the power of the U.S. economy," adding, "As a result, the Federal Reserve lowered rates less, keeping U.S. rates higher than other countries, which supported the historic Dollar strength."

The value of the Dollar reached its highest in two years earlier this month as the Federal Reserve lowered the benchmark interest rate by 0.25 percentage points while reducing the expected rate cut for next year from 1 percentage point to 0.5 percentage points.

However, there are projections on Wall Street that the Dollar may have more room to rise next year.

Bloomberg reported that non-commercial speculative traders have increased their bets on Dollar strength ahead of the U.S. presidential election, and this trend has continued steadily since.

It also introduced that the size of contracts betting on Dollar strength is currently about $28.2 billion, the highest level since May.

Goldman Sachs analyst Kamakhya Trivedi stated in a memo released on the 20th, "The current Dollar strength is thought to not fully reflect the tariff factors promised by President-elect Trump, suggesting the possibility of further Dollar appreciation in the medium term."

Reporter Hyun Kyung Kim khkkim@wowtv.co.kr