Dollar appreciation Dollar appreciation\images\insights\infographic\dollar-bills-small.jpg August 29 2022 August 29 2022

Dollar appreciation

The dollar has been on the rise. What’s the implication for U.S. investors?

Published August 29 2022
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Dollar Appreciation Higher interest rates, global market volatility and stronger relative growth in the United States have contributed to the dollar’s rise. The U.S. Dollar Index was established in 1973 with a base of 100. The Index is used to measure the value of the U.S. dollar against a basket of major currencies and values are relative to this base. U.S. Dollar Index (%) The U.S. Dollar as compared to the Euro 57.6%, Japanese yen 13.6%, Pound sterling 11.9%, Canadian dollar 9.1%, Swedish krona 4.2% and Swiss franc 3.6%. The U.S. Dollar index was 105.8 in July 2002, 83.1 in July 2012, 92.4 in July 2021, 107.0 in July 2022. This marks a 28% increase from July 2012 to July 2022 and a 15% increase from July 2021 to July 2022. There are positive & negative effects of a strong dollar. The positives include that it makes imports cheaper aiding Fed’s infl¬ation fight, encourages traveling abroad where the dollar now goes a lot farther and lifts U.S. profits of foreign multinationals with operations here. The negatives include that it undermines exports by making them more expensive, discourages domestic tourism by making travel to U.S. more expensive and reduces U.S. multinationals’ overseas profits after currency adjustments. Information Sources: DailyFX, October 2019; Investopedia, June 2022; MarketWatch, July 2022; The Balance, July 2021; The Wall Street Journal, July 2022.