After a decade of sustained growth, in 2022 the dollar reached its highest level since the early 2000s. In 2024, the U.S. dollar will appreciate against most major currencies, including the yen, euro and yuan.
“Actually, I don’t like the word ‘strength’ because it has a positive connotation,” said Dr. overshoota global economics subscription research service. “What we really mean is, it’s more expensive than it used to be. So the dollar can buy a lot more foreign stuff than… it used to, which is obviously a good thing if you want to buy those things.”
The value of the dollar depends on economic conditions in the United States and around the world, so it’s difficult to simply label a strong dollar as good or bad.
“When the dollar is strong, the U.S.’s power projection is greater, and when the dollar is weak, the U.S.’s ability to project political power is diminished,” said Harold James, a professor of history and international affairs at Princeton University.
A strong dollar also has its drawbacks. If international consumers cannot afford U.S. goods, overseas demand for U.S. goods may decrease. American workers could be negatively affected.
“The people who benefit from a strong dollar are generally different from the people who benefit from a weak dollar,” James said.
Because of this negative feedback loop, the President of the United States does not always want the dollar to strengthen. For example, former President Donald Trump expressed concern before the coronavirus lockdowns about the impact of a strong dollar on U.S. exports. He attributed the rise in the dollar’s valuation to the Federal Reserve’s monetary policy approach.
Trump said at the meeting: “In my opinion, our own Federal Reserve has done us very serious harm, and the Federal Reserve has also created a very strong dollar, which is a good thing for a strong dollar, but This makes it more difficult to do business outside the country. One month after the Fed decided to keep interest rates unchanged.
watch video Learn more about the multifaceted impact of a strong dollar on U.S. consumers and workers, the factors driving the dollar’s rise, and how the president’s policies and actions affect its value.
