US dollar index climbs to highest in almost 20 years

The US dollar index on Tuesday climbed to its highest level in almost 20 years, as the Federal Reserve's rapid monetary tightening continues to push the greenback higher.

The index, which is used to measure the value of the US dollar against a basket of six foreign currencies that include the British pound, euro, Swiss franc, Japanese yen, Canadian dollar, and Swedish krona, jumped to 106.79 at 12.20 p.m. EDT (1620GMT).

This marked the highest level for the US dollar index since Dec. 2, 2002 when it had peaked at 107.31, according to official figures.

In order to tame the highest inflation in 40 years, the Fed has begun an aggressive tightening cycle by raising interest rates a total of 150 basis points since March. The central bank is expected to make another 75 basis points of rate hike later this month.

The Fed's monetary tightening is causing recession fears for the US and global economy at large.

While US stocks are undergoing a major selloff for weeks and indices dove into bear market territory, investors have been turning towards US dollar amid worries over global economic slowdown.

Earlier Tuesday, the euro against the US dollar plummeted to 1.0235 – its lowest value since Dec. 23, 2002.