PRESS ROOM
Rising Treasury yields lend support to the dollar
Thursday 25th March '21
The US dollar’s value relative to a basket of world currencies depreciated considerably in the second half of last year. Historically, the currency has experienced long cycles of strength and weakness that are typically linked with the US twin deficit, i.e., a combination of current account and budget deficits. When the twin deficit widens, the currency depreciates. In recent weeks, however, the sharp increase in Treasury yields have caused markets to weigh the possibility of policy tightening from the Fed. This is lending support to the dollar.