by ZeroHedge News Staff at ZeroHedge
The U.S. Dollar Index peaked in fall 2022, the highest it had been in nearly two decades, rising in response to aggressive interest rate hikes.
The index measures the value of the U.S. dollar against a basket of major currencies from six countries.
A gain indicates the dollar is appreciating against the basket and vice-versa.
The euro is the biggest component on the index and thus sways the index value and return.
In 2023, the U.S. Dollar Index declined from its highs while still maintaining a fairly elevated level as interest rates have stayed steady.
By far, the best performing major currency of 2023 was the Mexican peso, which appreciated nearly 15% against the dollar.
The peso appreciated significantly thanks to aggressive interest rate hikes by its central bank (currently at 11.25%) which pulls money into the country as investors chase better returns.
However, the peso’s continued appreciation could negatively impact the competitiveness of Mexico’s exports. In tandem, Asian imports to the country become cheaper which can hurt the country’s domestic industrial sector.
From across the Atlantic,…Continue Reading