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The Rise Of The US Dollar

One of the things that I enjoy most is the opportunity to speak publicly about the topic du jour. These audiences range from online, to corporate and universities. The speaking part is fun, however, my favorite aspect is always at the end where I take questions from the audience. What I like about this part is that it does two things for me. One, it allows me to have more fun as I have no idea what is coming my way. Two, it allows me to get inside of the minds of the people I deal with daily to see exactly what it is that either confuses them or keeps them up at night.

Last week I was leading one of these discussions. We were talking about interest rates and inflation, which frankly can get kind of dry. I finally got to the end and once again this question showed up which is why I thought it would be a good idea to write and speak about it here.

Why is the US Dollar strengthening and what does that mean to me?

The USD (US Dollar) is by far the largest and most currency in the world (source: Investopedia How the US Dollar Became the World’s Reserve Currency, Richard Best, 9/24/2022). We of course use dollars every day. Companies that sell goods overseas use dollar and currencies every day. Exporters and importers watch the USD closely as it can impact their earnings in a positive or negative fashion, depending on whether they are exchanging to or from the USD. I am going to address three areas that are affected by the rise and fall of the USD and why it matters to us.

How This Relates to us at Home

If you are traveling to Europe anytime soon, then CONGRATULATIONS, your trip is getting cheaper and cheaper every day. Right now, in your pocket or bank account you hold money that is denominated in USD. You get on a plane and fly to Germany. You go out to eat and open your wallet to pay and what do you pay with? Oh, that’s right! I am now in another country, and they use their own currency. I better run down to the bank and exchange my USD for Euros.

Under a 1 for 1 scenario, being that 1 USD = 1 EURO, you would simply exchange let’s pretend $100 for 100 Euros. You pay for your dinner and thank you very much. However, like I said above, the exchange rate between the USD and The Euro changes every second! One moment that $100 in USD might be worth 98 euro and the next 102 euro. Every move UP or strength in the USD means weakness in another currency elsewhere.

The USD has risen this year to levels against a basket of foreign currencies higher than we have seen in a generation. The rise has been more than 20% (source, Business, The Dollar is Surging. This is who gets helped – and hurt- by it’