In a recent development, the US dollar has emerged as the ultimate winner in a clash against notable currencies. The US dollar has risen against many leading currencies, notably the Chinese Yuan, Japanese Yen, and Indian Rupee, proving its mettle and might as the chief global currency.
The emergence of the dollar’s prominence on a global scale denotes its lasting legacy and the faith that consumers have projected in the currency. Amid calls for de-dollarization and “dollar ditching,” the latest geopolitical tensions have pivoted investors to take refuge in gold and USD as a hedge during stark economic meltdowns.
Also Read: 3 Reasons Why Other Countries Are Ditching the US Dollar
US Dollar Rises: Yuan, Yen, and Rupee Falls: What Happened?
On Wednesday morning (IST), the DXY index tracking the strength of the US dollar portrayed USD hovering at 106.36. USD was up by a notable 0.10%. The dollar is now projecting green as other significant currencies fall ahead of the dollar’s supremacy.
The Chinese yuan, which was recently bolstered by its government to tackle the USD’s global prestige, is now hitting an all-time low against it. The Yuan is now exchanging hands at 7.24 against one USD, while the Yen and INR show a notable decline, sitting at 154.53 and 83.94, respectively.
Also Read: Chinese Yuan Officially Outperforms the US Dollar
Why Is The USD Rising?
The sudden strengthening of the dollar has primarily been spurred by rising geopolitical tensions. The changing war dynamics between Israel and Iran are impacting global economics. The narrative is now compelling investors to desperately seek ways to hedge their funds amid the rising war crisis.
As the onslaught of the war negatively influenced the US stock indices and cryptocurrency market. The meltdown helped investors partially recover their losses by exploring age-old, robust investment alternatives, including gold and USD.
Per IG, Investors have started to acknowledge the USD’s potential as a sturdy investment alternative. in times of grave economic jeopardy.
“Amidst rising tensions in the Middle East, major currencies like the EUR, GBP, JPY, and CAD have reached yearly lows against the USD. The investors are considering USD as a safe investment asset. This move toward the dollar during geopolitical unrest underscores its role as a flight-to-quality asset in times of uncertainty.” IG later shared.