The euro fell to a record low against the dollar after an interest rate increase by the Federal Reserve

Illustrative file photo of US dollar, euro, and Ukrainian hryvnia banknotes taken in Kyiv, Ukraine. October 31, 2016. Photo / Photo / File

The euro fell to its lowest value against the dollar in 20 years, at $0.98After what The Federal Reserve raised interest rates by 75 basis points He will hint that he will increase it further this year and in 2023.

The Euro was exchanged at around 0730 GMT in $0.9833 vs $0.9891 In the closing hours of the European forex market trading the previous day.

The Federal Reserve raised interest rates to between 3 and 3.25%a decision that markets have already discounted, but its members’ expectations of rates are constrained, an increase in another 125 basis points Until the end of the year and a rise in others 25 basis points in 2023even put it in a file 4.6% (3.8% in June forecast).

In addition, tensions with Russia over the war in Ukraine have caused investors to avoid risk and buy dollars, which are considered a safe currency in times of crisis.

For its part, the Japanese currency fell on Thursday to the level of Minimum 24 years against the dollarwhich has become circulating in more than 145 yenafter the Bank of Japan announced that it would keep its ultra-loose monetary policy unchanged.

Illustrative file photo of Japanese yen and US dollar notes next to the chart in this photo taken on June 16, 2022. REUTERS/Florence Law/Illustration/File
Illustrative file photo of Japanese yen and US dollar notes next to the chart in this photo taken on June 16, 2022. REUTERS/Florence Law/Illustration/File

The news pushed the US dollar higher 145.28 yen, before backing off a little. In March, the price was close 115 yen per dollar.

Unlike other large economies that raise rates to contain price increases, The Bank of Japan maintains its ultra-loose policy last decade to reach sustainable inflation of 2%.

This has led to the depreciation of the yen in recent months, which in turn has increased the cost of imports in the world’s third largest economy.

Inflation rose to 2.8% in August, its highest level since 2014, but the Bank of Japan insists this is a temporary phenomenon caused by the war in Ukraine.

In a statement, the entity defended maintaining a super-flexible policy in the past decade to “achieving the 2% price stability target” of inflation.

(with information from the EFE and AFP)

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