- The Dollar Index (DXY) loses 0.13% daily, consolidating in the range of the previous session.
- The Dollar falls 0.73% against the Costa Rican Colón, trading at the time of writing above 504.05, reaching lows not seen since April 30.
- The focus will be on the US Consumer Price Index, to be published on Wednesday.
The Dollar Index (DXY) falls 0.04% on the day, currently trading above 105.83. The DXY has reacted lower from short-term resistance given by the December 2 high at 106.73. Investors’ eyes are on inflation in the United States, measured by the Consumer Price Index, to be released on December 11.
Price of the Dollar today, December 9, in Honduras, Nicaragua, Guatemala, El Salvador and Costa Rica
Price of the Dollar in Honduras
Buy: 24.3492 Sell: 25.8313
Price of the Dollar in Guatemala
Buy: 7.5267 Sell: 7.9054
Price of the Dollar in Costa Rica
Buy: 490.8 Sell: 517.31
Price of the Dollar in El Salvador
Buy: 8.5284 Sell: 8.9828
Price of the Dollar in Nicaragua
Buy: 36.3459 Sell: 37.2927
Dollar Index loses traction ahead of US inflation
The DXY has resumed the bearish outlook, trading near two-week lows at 105.83. The Department of Labor will publish the United States Consumer Price Index on Wednesday, December 11. The consensus expects it to be 2.7% in November, slightly higher than the 2.6% recorded in the previous month.
The US Dollar FAQs
The United States Dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation alongside local banknotes. According to 2022 data, it is the most traded currency in the world, with more than 88% of all global currency exchange operations, equivalent to an average of $6.6 trillion in daily transactions. After World War II, the USD took over from the pound sterling as the world’s reserve currency.
The single most important factor influencing the value of the US Dollar is monetary policy, which is determined by the Federal Reserve (Fed). The Fed has two mandates: achieve price stability (control inflation) and promote full employment. Your main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% target set by the Fed, the Fed raises rates, which favors the price of the dollar. When Inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the Dollar.
In extreme situations, the Federal Reserve can also print more dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. This is an unconventional policy measure used when credit has dried up because banks do not lend to each other (for fear of counterparty default). It is a last resort when a simple lowering of interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy US government bonds, primarily from financial institutions. QE usually leads to a weakening of the US Dollar.
Quantitative tightening (QT) is the reverse process by which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal of maturing portfolio securities in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
