from last few days - v r reading headlines that global mrkts r falling bcos of currncies of UK , japan n china falling but but dollar is going up . why is that? we live in a globalized economy n if one country is affectd others too vl get affected including US ? n US also is not growing that strongly n also imports a lot.
The reason why the dollar is going up consistently is because consistent rate hikes by the Fed has made US treasuries and USD more attractive as they now offer a higher interest rates. Also, USD is seen as a safe currency in these uncertain times. We can expect other central banks to try and fight off against the rising USD, but the firepower these banks have is limited, and in the short-to-medium term, USD and the dollar index can be expected to continue its uptrend.
To the best of my knowledge, Investors are flocking back to USD as it is considered as a safe currency at time of uncertainties. In addition, I am told, you can get risk free returns in investing in USA, hence investors are flocking away from other currency and investing back in Dollars.
whats confusing fr me is ; US dollar if gets too strong will it not force others to look at alternatives? n its nt like US is nt borrowing or is in surplus. it is always in defcit
There is Risk Free Returns. - Gilts, Government secured bonds are called Risk Free. Reason, if needed the sovereign/government will print currency and return your capital and interest. Returns that are generated from such bonds are called Risk free.
I was addressing that you have “risk free returns” in every country (that’s what every other return available is measured against), not just in the USA.
It’s just that they are currently the reserve currency of the the world, for now
It can go higher depending on the factors affecting it. If traders happen to invest in it, then obviously the demand increases. Also, no question is silly, in this forum, we are here to help each other grow.
petro dollar is still there, though nails in the coffin are already there(i.e BRCIS , russia-china reserve currency, bilateral trades, iran doesn’t trade oil in dollars etc), Unless Kingdom of saudi arabia , iraq and most OPEC stop pricing and selling oil in dollars, the dollar index will still keep going up, the dollar will still be strong especially with energy prices increasing. Things may change very rapidly if KSA decides to suspend their agreements with US partner to price & trade in dollars, if that happens you will hear about human rights in media and America going to give freedom , untill then dollar will still remain strong.
Just look at recent OPEC+ and their shenanigans particularly KSA, they are cutting down on output production limit and this will increase prices especially during winter and will make the dollar even stronger.
biden on news:- Please we request OPEC+ not to cut down production. We need to stabilize energy prices and control inflation.
biden in background with FED and quasi Military industrial complex:- Good, good. Well boys our prince in middle east and the OPEC+ plus clowns have made sure the printer that printed too much dollar will not degrade in value. We can keep importing more goods and printing more dollars. If they suspend the use of dollar, then uncle sam can go and give freedom
Because it is a very strong currency and it holds its place in the market. It can’t be replaced so even if it is increasing, make sure you make the right move.