Be wary, "the strongest dollar in history" is here

The US dollar has continued to strengthen recently, and the "nominal valid exchange rate" that reflects the comprehensive strength of the US dollar has just reached a record high. The unprecedented strength of the US dollar leads to the weak other currencies such as the euro, the pound, and the yen: the exchange rate of the euro against the US dollar is nearly 20 years, which is close to 1: 1; After the psychological barrier, it hit a new low in 24 years.

The "Hao Heng" of the US dollar trend has formed an impact in Asia, Europe and other places through extremely sensitive market transmission mechanisms: Japan and South Korea and other countries have opened the "Currency Defense War" again after the Asian financial crisis in 1998, as the third largest economy in the world Although the body of Japan has nearly $ 1.2 trillion in foreign exchange reserves, if the foreign exchange market continues to be turbulent and the yen exchange rate against the US dollar will be comprehensive, Japan alone will be difficult to stabilize the market expectations. It may be the last choice under extreme difficulties. The situation in South Korea is smaller than that of Japan's rotation. It not only has a huge gap with Japan in absolute economic strength. The economic system that highly depends on exports is weak. There are not many ways to face the decline in the Korean won. As for the euro zone, the reason why the euro loses retreat under the squeezing strong dollar is to a certain extent that investors are expected to be pessimistic about the economic trend of the euro zone under the context of the continued context of Russia and Ukraine; The 40 -year high, and the growth prospects are dim, and the trend of the pound in the foreign exchange market has become increasingly difficult.

It should be pointed out that the so -called "the strongest dollar in history" that appeared in the world today is not because of how powerful the real economic fundamentals of the United States are, but the result of the Fed's result of "holding high" for a single monetary policy in response to severe inflation.

In fact, the American economy is already full of sores, "debt and unhappy", and the imbalances in inside and outside are serious. From a technical point of view, since the international financial crisis in the United States in 2008, although the economic fundamentals have stabilized to a certain extent by repairing financial trauma and relying on technology companies' innovation, the growth of the US economy has been compared with other major economies in the past 14 years. It is impossible to open the gap significantly, and at the same time, it also encounters the increasingly fierce competition from the cutting -edge technology sector to the high -end value chain. To this end, Washington offers the "US priority" protection policy, and even provokes to the outside world to pressure the limit.

But in general, there are fewer and fewer cards in the United States, and unilateralism is increasingly unreasonable. The Biden government tried to adjust it after coming to power. However, the "ace" with strategic advantages in the United States still has a strategic advantage, and there are probably only force, finance, and a group of super technology companies. Therefore, since the outbreak of the new crown pneumonia, the Fed's monetary policy has been the core of the US economic policy. However, after the high inflation caused by the "helicopter sprinkling money" to the large -scale currency water release has become the number one economic problem, the Fed was forced to start an ultra -conventional hard interest rate. In short, behind the appreciation of the US dollar is the market response of the Fed's tightening of Cyclonus monetary policy. As for the spread arbitrage, negative overflowing, and the severe turbulence of the international financial market, it is not listed in the Federal Reserve's current policy.

Therefore, the so -called "the strongest dollar in history" is not only the market performance of the Fed's implementation of a strong US dollar policy under high inflation, but also the axis of the global currency system and the global foreign exchange market, reserve assets, trade settlement and other fields. Closely related. In the context of the global economy is highly uncertain and geopolitical, the risk aversion of assets is heating up and seeking the natural logic of investors away from the core of the conflict. To put it bluntly, when the global economy is in the uplink cycle, asset holders will carry out global layout in the market "beauty selection", and when the global economy is in a downlink cycle, asset holders will allocate assets to the axis of the axis. Currency issuancers, even if the country's economic prospects are not good.

The other side of the strong currency is the impact of the "Darwinism" based on the role of currency conduction. Regardless of the Greek debt crisis, the European sovereign debt crisis, or the debt difficulties of the majority of small and medium economies, the United States is irresponsible to some extent. The negative effects of monetary policies are presented globally. Until today, the global currency "collective depreciation" outside the US dollar is undoubtedly related to the severe imbalance of the global currency system. In this sense, the impact of "the strongest dollar in history" is particularly vigilant and thoughtful that the international community, including emerging market countries and developing countries.

Author Zhang Yugui, the dean of the School of International Finance and Trade, Shanghai University of Foreign Languages

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