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How Long Will the Strong Dollar Last?
It depends on the demand for the dollar, how long it remains a safe haven, and whether it maintains its status as the dominant global currency. Currently, the dollar is strong due to the strength of the U.S. economy, the safety of the dollar due to the low risks of the U.S. economy and government, its function as the petrodollar, and its status as the world's reserve currency.
How Does the U.S. Dollar Gain Strength?
The dollar strengthens when interest rates rise, and international investors view it as a safe haven for maintaining and increasing value during turbulent economic times. In general, the strength and value of a currency depends on the demand for that currency. The dollar will strengthen when demand for it strengthens.
What Currency Has the Highest Value?
The Kuwaiti dinar has the highest value of any currency. The country's position as an oil-rich, economically stable nation gives its currency such a high value.3
The Bottom Line
A strong dollar allows U.S. consumers to purchase goods and services from overseas for less than if the dollar was weaker. It also helps compensate for rising inflation by keeping purchasing power from dropping too much.
Businesses that export and do most of their business overseas become disadvantaged by a strong dollar because they tend to see reduced revenues from the areas the dollar is strong against. But generally, it is good for the U.S. economy to have a strong dollar.