Strong US dollar an unstoppable force endangering other currencies

Strong US dollar an unstoppable force endangering other currencies

NEW YORK: The dazzling rise of the US dollar, which has hit one record after another, is raising fears of a currency crash of a severity not seen since the 1997 Asian financial crisis reverberated around the world. The Federal Reserve’s rapid, steep interest rate increases and the relative health of the US economy has caused investors to flood into the dollar, driving the greenback up and sending the British pound, Indian rupee, Egyptian pound and South Korean won and others to uncharted depths.

“The moves are definitely getting extreme,” said Brad Bechtel of Jefferies, warning that the exchange rates could fall further creating a “dire situation.” Most other major central banks also are forcefully tightening monetary policy to bring down inflation, but so far the moves have not helped stabilized the currency market, nor has Japan’s direct intervention to support the yen last week. Many fear that the same will be the case with the Bank of England’s plan announced Wednesday to conduct emergency purchases of government bonds to support the pound.

“We have our doubts that the BoE’s plan will be the silver bullet to kill all of the angst that has been pressuring the pound … considering its plan doesn’t have