The U.S. Dollar Index, which measures the value of the United States dollar against foreign currencies, has reached its highest level in over four years. For a long time, the dollar has been the world’s top business currency. However, the struggling recession had caused many to question the dollar’s “safety” as an investment. With this new high though, America is regaining its strength and showing its economic improvement compared to the rest of the world. At the same time, the Euro and Japanese Yen have been getting weaker due to these countries’ economic problems.
So, what does this mean for America?
According to economists from Capital Economics, the dollar trend is likely to continue. This could encourage the Federal Reserve to raise interest rates, which will be a good thing for U.S. currency. Foreign investors will also realize that the U.S. is a good place to invest. A strong currency also means that consumers could benefit from lower prices. As more people want to invest, more goods will be imported, resulting in lower prices. Plus, if you’re planning a vacation abroad, the exchange rate will be in your favor, so you can get a little more bang for your buck.
Source: CNN Money
