The U.S. Dollar is quickly making a comeback, and this is the quickest comeback seen by the dollar in over 40 years. In terms of just within the past eight months, the dollar has risen at a quicker rate and strengthened more than any other major currency that is used in the world.
Bank of America Merrill Lynch says that the dollar has gone up in value over 14% in just the first few months of 2015, which is a positive sign that the dollar is once again ready to hold the number one position for many more months or years to come. The dollar has risen partly because of how quickly and strongly America has come back from the brink, following the major financial crisis of 2008, and a slow economic recession that followed for quite a few years afterward. This means that America has essentially weathered the storm, and are in the clear once again.
There is also the issue of how in Europe and other countries, political turmoil and financial problems remain, which makes America and the dollar look even better. The countries that are seeing financial troubles are also in the process of creating stimulus packages and trying to restart the road to recovery, which is good if you consider how each county positively and negatively impacts all of the others.
Although a strengthened dollar is great for America, it’s actually really hurting Europe, and the businesses that are in Europe, such as Coke. The euro is now at it’s lowest point since 2003, with one euro being worth only $1.05, when it used to be $1.40 just a couple years ago. The euro might end up even going below $1 within the next 16 months, which is something Goldman Sachs is predicting will happen, and the company even sees it falling to $.80 in 2017.
As it stands right now, the dollar is expected to continue to quickly rise, with the economy looking even better and the Federal Reserve looking to finally raise interest rates, which it hasn’t done in over 10 years. This all means that the dollar will become even stronger, with the decline of the euro, there is almost nothing that can stop the rapid rise of the dollar.
However, the rise of the dollar in such a short amount of time is negatively impacting businesses that sell products overseas, especially to places like Europe. What is happening is that the dollar is rising so quickly that the cost of products is also rising, making it nearly impossible for people overseas to buy American products, and this hurts the bottom line for a lot of big businesses in the United States. It will get harder for America to sell products overseas due to the cost associated with it, but if Europe and other countries can quickly pass stimulus packages, it might help take some of that sting off a little.