The US dollar is the strongest currency this year. Why is it really a good thing?

If you want to ask which is the most powerful currency in the world today? Today in 2022, the dollar will definitely raise the list, and even the British media is saying that a strong US dollar is a headache. Why is it really a good thing? What should we think of the current strong trend of the US dollar?

1. The US dollar is the strongest currency this year?

Reference News Network reported on July 31 that the British "Financial Times" published an editorial entitled "Strong US dollar to make other countries headaches". Americans who are fortunate to be able to go abroad this summer may be surprised by the strong US dollar -the exchange rate of the US dollar to other major currencies has risen by 10%this year. But this kind of strength is actually a bad news. This is a by -product of serious central bank and severe inflation.

The main driving force of the US dollar strong is the rise in US benchmark interest rates -from 2.25%to 2.5%from nearly to 2.5%from nearly to 2.5%from the beginning of this year. Compared with other major economies, the United States tighten the monetary policy faster and has also promoted the sharp appreciation of the US dollar.

It is necessary to raise interest rates quickly. In the past 12 months, the US consumer price index rose sharply by 9.1%. It is too late to stop the extensive price that has already begun to be on, but it is not too late to work hard to stabilize expectations to reduce inflation.

However, the Fed's task is becoming more and more complicated. This week, we learned that the US economy is cooling. How bad is the situation? The latest second quarter data shows that the GDP in the United States has decreased slightly. Evidence has shown that rising interest rates have begun to affect investment. But consumers are still spending money, and the employment market is still hot.

However, at the same time, the interest rate gap between the United States and other countries in the world is a problem. Although this is a good thing for Americans who go out for vacation, it is a bad thing for the world.

According to the "US dollar smile theory" proposed by former Morgan Stanley currency strategy analyst Stephen Jen, the US dollar will strengthen when economic downturn and prosperity. One situation is that the US economic prosperity promotes the appreciation of the US dollar. Another situation is that risk aversion promotes the appreciation of the dollar.

Second, why is it really good to say that the US dollar is strong?

We see that the dollar has become the most powerful currency this year. This incident is not surprising, but it is also very worried. What should we think of this?

First of all, the US dollar has always been a famous world currency. In the process of trading and settlement in the world, the US dollar plays a very important role. In this regard, the positive significance of the US dollar is undeniable. Objectively existing, these are the facts we must admit. From an objective perspective, a strong U.S. will inevitably drive changes in the entire import and export of the United States. It will undoubtedly be cheaper with the US dollar to purchase goods produced by countries around the world. This is a relatively beneficial thing to the United States but relatively unfavorable to other countries in the world.

Secondly, what we see is that the strengthening of the US dollar on the entire market is not actually a strong strong economic development in the United States, but because the current world is in a very anxious risk aversion, and the world's market is worried about With continuous strengthening and under such a background, everyone will try to choose a relatively safe currency to avoid risks. This is actually the core reason for the current appreciation Approval may not be a good thing. After all, the current appreciation of the US dollar is not the basis of the US economy, as support, which is a relatively large risk for the entire US market.

Third, we also observe that the current level of inflation in the United States is relatively high. Under such a high inflation, if the US dollar is still appreciated, it may actually further the inflation in the United States to further the whole general to the whole fulfillment The spread of the world's consumer market is really not a good thing for the world's market. On the one hand, when countries in the world need to use US dollars to purchase international products, they want to hedge the risk of hedging, and on the other hand, they need to continuously cope with the pressure brought by this input inflation. Therefore, the appreciation of the US dollar may further intensify, and The imbalance of the world economy has led to the development of the entire world economy in a higher risk state.

- END -