US dollar hits new 20-year high as Russia calls off reserves

CNN business

The US dollar rose to a new two-decade high on Wednesday after Russia said it was mobilizing 300,000 military reservists in an escalation of the war in Ukraine.

In a nationally televised address on Wednesday, President Vladimir Putin announced the immediate partial mobilization of Russian citizens and threatened to use “all means at our disposal” to defend Russia “and our people”. He also mentioned the possible use of nuclear weapons.

Conference Since 2002, the greenback has risen 0.4% against a basket of major currencies. Investors often seek the safe haven of US dollar assets during times of geopolitical tension.

Oil prices also rose. Brent crude futures, the global benchmark, gained 2.5%, below $93 a barrel.

Russian shares fell 3.5% on Wednesday after the announcement, adding to Tuesday’s steep losses after Putin threatened to hold referendums on whether to annex parts of Ukraine still occupied by Russian forces. The ruble also fell almost 3% against the US dollar.

Asian stocks retreated. While European indices fell early, they were last flat or slightly higher in morning trade ahead of the Federal Reserve’s latest policy announcement.

The euro initially fell 0.7% to 98 cents ($0.97) against the US dollar, but has since rallied. The currency used by 19 European countries sank below the dollar at the end of August, shaken by rising inflation and the energy crisis caused by Russia’s invasion of Ukraine in February.

The war has increased stress for investors, as it is harder to predict when inflation will ease and could push central banks to maintain an aggressive stance for longer.

Tara Subramaniam and Andrew Raine contributed reporting.