US dollar heads into second half as world’s top-performing major currency

The US dollar has emerged as the best-performing major currency in the first half of the year, strengthening by 3% versus last year, driven by resilient US economic data, rising rate hike expectations, and AI-led growth optimism. Markets now expect at least one Fed rate hike this year, with the dollar at 40-year highs against the yen and near year-highs versus the euro. The article notes that emerging markets such as India have tried to support their currencies or raise interest rates to limit pressure from a stronger US dollar, while around $341 billion has flowed into US equities year-to-date, signalling potential FII outflow pressure on Indian markets.