The US Federal Reserve summarized its fight against inflation. This time, let’s summarize the reasons and effects of the strong U.S. dollar.
The U.S. dollar is rising sharply compared to other currencies in September 2022 Let’s summarize the reasons and effects of the strong U.S. dollar.
It is stronger than the Korean won, the Japanese yen, the Chinese yuan, and the European euro.
The Reasons and Effects of the U.S. dollar’s Strength
Compared to early January 2022, the U.S. dollar on September 29, 2022 is worth 20% more than the Korean won, 25% more than the Japanese yen, 12% more than the Chinese yuan, and 22% more than the euro.
It’s good news for the United States right now, but it’s going to be a big problem for other countries.
In general, political stability and positive economic forecasts are needed as necessary to become a strong currency.
The strong U.S. dollar can be attributed to people’s trust in the U.S. economy.
One of the main reasons for trusting the U.S. economy is that the Federal Reserve is aggressively raising its benchmark interest rate to combat inflation.
The Fed’s move to raise interest rates gives the U.S. the belief that it will control inflation and strengthens the U.S. dollar.
Another reason why the U.S. economy is trusted is that the world’s competitors are relatively struggling.
After years of economic growth, China’s economic growth rate has been slowing down due to the recent property market crash.
A strong dollar benefits Americans in the short term.
It is beneficial to individuals and companies because you can enjoy it cheaper when you travel abroad, the price of imported goods falls, and the price of raw materials abroad becomes cheaper.
However, the disadvantage is that the price of goods exported by the U.S. increases, which could lead to a drop in sales of U.S. companies