Dollar dips but set for 7% annual gain

Dollar dips but set for 7% annual gain

In the last day of 2021, USD dips but set for a 7% gain yearly gain.

In 2021, the Turkish lira was down by around 44%, down by around 44%.

NEW YORK, December 31 - The dollar index fell on Friday in quiet holiday trading but was set to end 2021 with a gain of nearly 7%, as investors bet that the U.S Federal Reserve will raise rates earlier than most other major economies because of the rising inflation caused by COVID 19 stimulus initiatives.

The dollar index, which measures the dollar against six major rivals, was down 0.289% to 95.729.

The dollar is poised for its best year since 2015 due to the improvement of the U.S. economy and persistent inflation that led to a hawkish turn by the Fed, which is now expected to raise interest rates as early as March.

The Canadian dollar, which was around flat for the year in 2021, was the best performer of major currencies against the dollar, helped by expectations that the Bank of Canada will tighten its monetary policy in January.

The Japanese yen is down around 10% this year, which is the worst performer against the dollar.

The euro, which makes up the biggest weighting in the dollar index, was down a little over 7% in 2021, with the European Central Bank ECB sticking to ultra-dovish monetary policy settings while the Fed accelerates its taper and looks to hike, analysts at Scotiabank said in a note to clients.

There is still a chance that the ECB hikes in late 2022 early 2023 could provide some support next year, and that we see continued weakness in the shared currency next year to the 1.10 mark and likely beyond as headwinds remain firmly in place, they said.

The euro was down around 6% against sterling, as concerns in Britain about the economic impact of the pandemic boosted the British currency, with analysts expecting more rate rises from the Bank of England in 2022.

It was at its highest level against the euro since February 2020, but it was down a little over 1% against the dollar for the year.

The Turkish lira, which was down around 44% against the dollar in its worst year in two decades, was battered by soaring inflation and the Turkish government's unorthodox monetary policy, which was the biggest laggard of the year.

On Friday, the euro was up 0.33% to $1.1362.

The pound was up 0.21% at $1.3527.

The yen was down 0.03% at 115.075 per dollar.

The Turkish lira was up 0.98% at 13.1835 per dollar.

In cryptocurrencies, the price was up 1.66% at $47,931. It was due to end the year with a gain of around 65%, but well off its November peak of $69,000, as it was set to end the year with a gain of around 97.