Dec 6 2024: This year, the U.S. dollar has benefited greatly from a surge in American growth, productivity, and stock market performance, largely driven by the tech sector. However, its strength has also been bolstered by the troubles faced by its global competitors.
Unforeseen political and economic upheavals, such as the chaos in South Korea, which caused the won to hit a two-year low, have led investors to seek the safety of the dollar. Similarly, concerns about U.S. President-elect Donald Trump’s trade policies have weighed on the Chinese yuan, and economic challenges in other regions, including the eurozone and Brazil, have added to the dollar’s advantage.
Despite a 5% rise in the dollar index, the currency’s gains have been modest considering the strong demand for U.S. stocks and the Fed’s cautious approach to interest rate cuts. However, with the dollar near its highest level in over two decades, further gains may prove difficult if other economies regain strength.