Recession worries could support dollar after monstrous 2022 rally

US dollar banknotes are displayed in this illustration taken, February 14, 2022.— Reuters

NEW YORK: A breathtaking surge in the US dollar trampled foreign currencies, gouged corporate profits and gave investors one of the year’s few winning trades. Though the greenback has stumbled in recent weeks, recession worries may keep it elevated in 2023.

At its September peak, the dollar pace of the rate increases helped fuel the dollar’s gains.

While rising US yields were a key catalyst for the dollar’s rally, other factors played an important part in boosting the buck. Investors flocked to the dollar — a popular destination during uncertain times — to shelter from market volatility spurred by surging global inflation, spiking energy prices and Russia’s invasion of Ukraine.

Also heightening the dollar’s allure was the comparative strength of the US economy during a time when fears of an…

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