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Published on 18 April 2024
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Impact of the Federal Reserve Interest Rate Hikes on the U.S. Dollar Exchange Rate

Mengxue Tian *,1,
  • 1 Faculty of Natural, Mathematical & Engineering Sciences, King's College London, WC2R 2LS, United Kingdom

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/78/20241636

Abstract

After the meeting held on March 15 and 16, 2022, the Federal Reserve announced the beginning of a cycle of rate hikes, keeping the federal funds rate at 0.25-0.50 percent. As of its most recent meeting, held from October 31 to November 1, 2023, the Fed has raised interest rates eleven times, reaching 5.25-5.50 percent. The U.S. dollar exchange rate has fluctuated after interest rate hikes with decades of history. To figure out the impact of the Fed interest rate hikes on the U.S. dollar exchange rate, this paper analyzes based on three parts: the first part studies the interest rate effect, capital flow theory, the sentiment of investors, and stock market; the second part analyzes historical data since 1980 and different points of view; the third part discusses other factors that affect the exchange rate. The research concludes that the Federal Reserve interest rate hikes increase the U.S. dollar exchange rate overall.

Keywords

The Federal Reserve, U.S. Dollar, Interest Rate, Inflation

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Cite this article

Tian,M. (2024). Impact of the Federal Reserve Interest Rate Hikes on the U.S. Dollar Exchange Rate. Advances in Economics, Management and Political Sciences,78,67-72.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 3rd International Conference on Business and Policy Studies

Conference website: https://www.confbps.org/
ISBN:978-1-83558-379-1(Print) / 978-1-83558-380-7(Online)
Conference date: 27 February 2024
Editor:Arman Eshraghi
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.78
ISSN:2754-1169(Print) / 2754-1177(Online)

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