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USD has been noticing a continued spike in the last week, especially so for the most traded pair EUR/USD. The rise of the USD has been a basis of conjecture for many analysts who have seen the currency being debased in the last five years and still continues to rise at an astronomical rate. In the last two years, U.S. Dollar index is up by 10% as compared to the other top currencies of the world. Read more on anyoption for details regarding the strengthening dollar and its impact on the Eurozone.

The strengthening of the US dollar in the last few days has been initiated by European Central Bank when they slashed the interest rates on June 5th. The president of ECB further informed that the interest rates will remain low for some time now. The governor of Britain, Mark Carney, also said that the British economy is too weak to fiddle with the benchmark rate of interest which was implied by the rise in long term bond yields. The other thing that supported the dollar was the 2.1% increase in the Consumer Price Index which did not hit the downward spiral despite the inflation. The increased cost of CPI has been attributed to 3.3% rise in the gasoline prices which has been the largest gain since last year.

What the experts explain is the main reason for the rise of US dollar is that it is the reserve currency of the world. The majority of nations use dollar as the currency to buy commodities such as oil which keeps propelling the US economy towards betterment. The monetary stimulus of the Federal Reserve can take the credit for keeping the dollar strong against other currencies. However, it has been speculated that when the stimulus weakens or ends, it can have strong impact on the currency.

With the dollar at an all time high, the vacations to US will be affected as it will be pricier than usual. The immediate spur of the rising dollar has been pointing towards the Federal Reserve’s purchases of the bonds that have been bought using the freshly minted currency. The quantitative easing has already augured well for the long term interest rates with yields rising to a 2.6% from the downward low of 1.6%. When the yields show an upward trend, it attracts more capital investments in America from other parts of the world which propels the dollar towards growth.

The deeper insight into the upward trend of the dollar can be seen in the overall health of the economy of America which is currently in a good shape. With housing market on recover mode, bad mortgage debts wiped out of the system and opportunistic job market with 195,000 employees added to the non-farming sector is a big boost to the economy. Despite the holistic growth, GDP has remained modest and will strengthen a bit in the coming days.  As per the IMF projections, the American Economy is expected to grow at a 2.7% rate next year. Even though this is not a classic improvement, but as compared to the other economies of Japan and Britain are not likely to do this well and with Euro zone still in the recessionary phase will keep America at the top.

The transatlantic gap in the interest rates of the both the markets are expected to rise as the monetary policies of America and Europe become clearer. With this trend, the dollar will rise further.

Panicos Demetriades – the governor of Cyprus central bank – has resigned after reportedly experienced difficulties with the government and had been criticized for his handling of the country’s 10 billion-euro bailout.

There was no official statement on Monday about why Panicos Demetriades had stepped down.

Panicos Demetriades’ departure comes after Cyprus’ bailout was thrown into doubt when its parliament rejected a key part of the plan, and then passed it a day before the deadline was due to expire.

A spokesperson for the European Central Bank said: “The ECB takes note of the resignation of Panicos Demetriades who has been the governor of the central bank of Cyprus through very difficult times and played an important role in the implementation of the adjustment program.”

They added: “We count on a fruitful cooperation with his successor.”

Panicos Demetriades has resigned after being criticized for his handling of Cyprus' 10 bn-euro bailout

Panicos Demetriades has resigned after being criticized for his handling of Cyprus’ 10 bn-euro bailout

Cyprus was nearly bankrupted after Greece’s financial crisis in 2010.

The country’s banks were hit heavily but its government did not have the funds to issue a bailout.

Slow economic growth and the stance of international lenders, who stopped offering loans, added to the pressure on the country’s finances.

Panicos Demetriades, formerly an economics professor at the University of Leicester, was appointed in May 2012 for five years by Cyprus’ former communist president, Demetris Christofias.

The former president has reportedly been blamed for policies which could have contributed to Cyprus’ crisis.

Last year Cyprus’ banking system was rescued from collapse by a 10 billion-euro bailout from the EU and IMF.

Current president, Nicos Anastasiades, said in September he might ask the country’s supreme court to rule on whether Panicos Demetriades could be sacked.

That was despite the ECB last year issuing repeated warnings to the Cypriot authorities not to interfere with the governor’s work.

Last month Cyprus’ lawmakers threw the bailout program, and the country’s next tranche of cash, into doubt over a bill allowing state firms to be privatized.