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Dollar Continues To Rise, Records Fresh Two-decade High

The U.S. dollar soared to a fresh two-decade high, pushing several major currencies to their multi-year lows in the process, amid mounting fears of a recession due to aggressive policy tightening by the Fed and increasing possibilities of more sharp increases in interest rates lifted its safe-haven appeal.

The Federal Reserve announced its third straight 75-basis point hike in interest rates on Wednesday, and signaled more such moves in the upcoming meetings, aiming to fight inflation.

Several other central banks, including the Bank of England and the Swiss National Bank raised their benchmark rates, and the European Central Bank is likely to make a similar move at its next meeting.

Both the IMF and World Bank flagged recession risks last week as central banks across the world simultaneously hike interest rates to combat persistent inflation.

The dollar index surged to 113.23, a new two-decade high, and despite paring some gains subsequently, remains pretty strong at 112.96, gaining nearly 1.5% from previous close.

Against the Euro, the dollar firmed to $0.9692 from $0.9838. Data showing a contraction in Euro area business activity in the month of September weighed on Euro.

The dollar is up sharply against Pound Sterling at $1.0862, strengthening from $1.1254. The British currency shed ground against its rivals as the new government unveiled tax cuts and huge increases in borrowing in its mini budget that spooked the markets.

The Chancellor announced that the top rate of income tax will drop to 40% from 45%. The basic rate of income tax will be slashed to 19% next year, from 20% at present.

Against the Japanese currency, the dollar is gaining at 143.35 yen a unit, compared with 142.37 yen on Thursday.

The dollar is up against the Aussie at 0.6531, rising about 1.75%.

Against Swiss franc, the dollar has firmed to CHF 0.9816 from CHF 0.9770.

The Loonie is losing against the dollar at C$1.3582, easing from C$1.3488 amid a sharp drop in crude oil prices.

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