Over the past year, the US dollar has been strengthening with respect to other currencies around the world, the greatest increase occuring after the start of the Russian invasion of Ukraine. The USD has increased 12% with respect to the Euro and 16% with respect to the Japanese yen in the last year, 5.6% and 10.8% respectively occured within the last 3 months. Part of the reason for the recent apprieciation is because there is a large demand for US assest as they are currently viewed as very stable. This is because the US is geographically further from the conflict between Russia and Ukraine, and the US is less dependent on exports from either of those countries. As a result a vast amount of capital is being moved to the US where it is percieved that it will be more stable.

A stronger US dollar means that in the United States the price of imported goods will drop whereas the price of US exports in other countries will grow. As a result imports will increase and exports will decrease in the United States leading to a greater trade decifit. Countries with particularly high imports from the US will be hard hit by the strengthing dollar especially low-income countries who were just recently subject to economic strain from the COVID-19 pandemic. The article suggests that the reason there hasn't been much effort on the part of the US government to slow the strengthening of the dollar is that they may be powerless to change it while the Federal Reserve is focused on stopping the excessive inflation in the US right now.

This article was very interesting to me espicially against the backdrop of the other blog posts for the class I and others have done. Currently, the US has an inflation problem and it has been some of the biggest economics news over the past few weeks. However this article is showing that the buying power of the US dollar in the foreign exchange market is actually growing. The conclusion that I come to knowing both of these facts is that internationally the US has a relatively low inflation rate and rampant inflation is an international issue. I wonder if this international scale inflation is due to a common cause.

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