The dollar that powers world trade is on a rise that has no parallel in modern history. Its rise is primarily the result of an aggressive hike in the Federal Reserve's interest rate - it was raised another 75 basis points on Wednesday - and has left a devastating trail: rising food import costs and deepening poverty in much of the world; fueling debt defaults and overthrowing the government in Sri Lanka; piling up losses for investors in stocks and bonds in financial capital everywhere, writes Bloomberg.

According to some reports, the dollar is now at an all-time high. Since mid-2021, it has risen by 15% against a basket of currencies. And with the Fed determined to keep raising rates to quell inflation - even if it means plunging the US and global economies into recession - most long-time currency watchers see nothing to stop the dollar from rising.

All of this is a bit like the Fed's anti-inflation campaign under Paul Volcker in the early 1980s. That's why there's more and more chatter about the possibility of resurrecting the Plaza Accord, the agreement that allowed the dollar to be artificially reined in. A deal like this might seem unlikely right now, but with some market indicators suggesting that the dollar could easily rise by the same amount again - a profit that would shake the global financial system and cause all sorts of additional problems - it's probably only a matter of time.

There is no kryptonite that can immediately undermine the strength of the dollar as the eurozone is hampered by the war in Ukraine and China’s rise is unstable, said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. Everywhere you look, there is simply no alternative to the dollar, and as a result, it destroys everything else - the economy, other currencies, corporate income, he added.

The US currency's meteoric rise is felt in daily life all over the world because it is the lubricant for global trade - roughly 40% of the $28.5 trillion in annual global trade is valued in US dollars. Its relentless growth risks creating a self-sustaining death loop.

Demand for the dollar has been strong for a simple reason: When the world markets go crazy, investors seek refuge. And, as the Bank for International Settlements put it, that guarantee is now backed primarily by the US dollar. The size and strength of the US economy remains unprecedented, Treasuries continue to be one of the safest ways to store money, and the dollar makes up the lion's share of foreign exchange reserves.

Some of the major indicators of the dollar show its ability to rise further. Although the Bloomberg Spot Dollar Index hit a record high this month, it has only been measured since the end of 2004. The narrower US dollar index ICE - its performance relative to its developed peers - is still well below levels seen in the 1980s. It would take a 54 percent rally to bring it back to its peak in 1985, the year the Plaza Accord was signed.

But this time things have changed, said Brendan McKenna, strategist at Wells Fargo Securities in New York. The strength of the dollar is not as visible - at least not yet - and the Fed should cut rates at some point next year when the economy cools off, easing pressure on the dollar. “Coordinated action to devalue the dollar and support G-10 currencies is probably not such a priority at this stage,” he said.

However, the currencies of many of these major economies are suffering. In addition to the fall in the euro, the Japanese yen has fallen to a 24-year low as investors seek higher yields.

For many emerging markets, the damage was even greater. The Indian rupee, Chilean peso and Sri Lankan rupee hit record lows this year despite efforts by some central banks to try to slow the decline. The Hong Kong Monetary Authority bought up local dollars at a record pace to protect the city's currency peg, while Chile's central bank launched a $25 billion intervention after the peso fell more than 20% in five weeks.