The Fed's pledge to be tough on inflation and raise rates again have propelled the US dollar to its strongest position in decades. It has hit some currencies like India's rupee very hard. The Euro and USD are equal right now.
Downside? American products will be more expensive as exports, but many imports will become cheaper.
Thomas Sowell: There are no solutions, just trade-offs.
The dollar is stronger than the rupee, therefore the U.S. will be flooded with imports from India while not exporting much to them. Similarly the dollar v. euro. Whereas the dollar has faded against the ruble. So much for the currency traders.
What does a strong dollar mean?
Simply that imports will be cheaper and domestic producers will be hurt. What does that lead to? try layoffs, no pay increases. Also a strong dollars is great for foreign investors who want to park their money in the U.S. (For those of us who remember the hyperinflation in South America, it seems that Argentina is repeating the 70's)
Great for the traveller who will save a couple of dollars on souvenirs and clothing, etc.
If you got your information from Money.com
Here is the rest of what was said:
At one point this month, the U.S. Dollar Index, which compares the dollar to a basket of six foreign currencies, passed 105 — the highest it’s been in roughly 20 years.
This appreciation is likely due to America's record-setting inflation... and the Federal Reserve's decision to hike interest rates as a means of controlling it.
money.com/what-does-strong-dollar-mean/
Last edit: 29 Aug 2022 12:38 by ramage. Reason: Add'n Inofrmation
It all depends on where you are at in the economy. American consumers should benefit, and energy shortages around the world might help keep high priced American products still in demand because production levels overseas are down, especially China and Europe.
Germany was even warning of another toilet paper shortage because plants will be shut down due to energy prices.
Thomas Sowell: There are no solutions, just trade-offs.
In reverse order:
1. The U.S. does not produce toilet paper in any significant amount, remember the T.P. run in 2020 .
2. Consumers of BMW's Mecedes and Porsches should benefit from the conversion rate but inflation will eat any savings. The consumer products that come from Europe are high end not what one finds in Walmart, Target, etc. Plus as U.S. manufacturers cannot compete and thus lay offs.
3 I don't know of any American products, again, only high end that would be sold to "high end" consumers, not the average European that is facing a 4000% increase in energy expenses.
Finally it all depends on one's own situation. e.g. a 2 week vacation in Portugal, first class will cost $20k including airfare is significantly less than booked 3 months ago. See your travel agent for confirmation.
