The strength of the U.S. dollar has increased dramatically over the past few years. In fact, in 2015, the dollar enjoyed its fastest rise in nearly 40 years. In June of this year, we began to see a slight decline in the dollar’s strength, but it still outweighs the majority of the world's other major currencies.1
On the surface this may seem like a reflection of U.S. economic power, but there is a down side to a stronger dollar as well. A strong currency is good. An inflated currency however, makes U.S. exports and products more expensive for other countries to buy. It also means that the value of overseas sales is reduced when converted back into U.S. dollars. This affects commodity prices and in kind, emerging market economies, all of which come full circle and affect the overall economic health of the United States. Everything is economically connected.
The Fed is watching. The world is watching. The strength of the American Dollar is something for all investors to watch in the coming months as well. For that reason, we’re offering a four part series of posts discussing the individual elements of the issue, and how they may or may not have an effect on the world economy and your individual investment decisions in 2016.
Stay tuned with us here throughout the month of July for a breakdown of how the strength of the dollar influences the world around us.
1CNN Money, Citibank