Dollar Rallies Against Rival Currencies at Start of Year
On the first trading day of the year, the dollar rose to its highest level in years against many of the world’s major currencies, amidst indications that the European Central Bank is soon planning a stimulus to the economy.
The dollar on Friday rose 0.8% to $1.2013, its strongest level since June 2010. It traded near a seven-year high against the yen, with a 0.3% gain, and rose 1.4% against the British pound, its highest level since August 2013.
The greenback also traded at parity with the Swiss Franc for the first time in four years.
Throughout 2014, the dollar rose compared to all of its 16 major peers.
Mario Draught, the head of the European Central Bank, told the German newspaper Handelsblatt that Europe “needs to regain its self-confidence after the crisis,” adding the risks “of not fulfilling our mandate of price stability” and keeping inflation from being to high or too low “are in any case higher than they were six months ago.
Mr. Draghi also told the Handelsblatt that the risk of deflation “cannot be ruled out completely, but it is limited,” acknowledging that there was a risk that low inflation could cause people to delay making purchases, which would further damage the economy by lowering corporate profits and causing worker layoffs.
(Photo: Accura Media Group)