The value of the USA dollar is rising higher over time. There are multiple reasons for this surge. One of the prime reasons is the tapering monetary policy of the Federal Reserve. This means that the flow of money easily into markets has been reduced. This move started in 2013 after Ben Bernanke began to talk about the reduction of asset purchases. Since he took up office in 2006, the Federal purchased assets worth $1.7 trillion to promote growth in the economy, take care of reduced interest rates and boost market liquidity.
Kavan Choksi UAE – Appreciation of the US dollar across the world today
Kavan Choksi UAE is an esteemed business expert well-versed in financial and investment matters. According to him, the US dollar is a powerful currency likely to face appreciation in the forthcoming years soon. Due to the above reason, one can invest in it to gain consistent profits. For instance, you can purchase bonds, stocks, or ETFs that have been denominated in American dollars.
When it comes to the rise of the US Dollar, one can witness that it has risen considerably high in the last couple of months. Since July 2014, there has been an approximately 10% rise in the value of the American dollar. If you compare it against the value of the Euro, it is indeed much stronger.
Reasons for its increase in value
The following are the major reasons contributing to the rise of the US dollar in value today-
- The economic recovery has been stronger in the USA, and this has led to a rise in the interest rates in the nation. Due to this fast economic growth after 2014, unemployment rates have dropped too.
- The interest rates in the USA are increasing, and this will attract more flow of capital into the nation. Due to this trend, the demand for the US dollar will rise further. Investors will be ready to invest in the dollar, thus pushing its value higher.
- News that the USA will cease purchase assets makes the dollar even more powerful.
- Euro is becoming weak, and the whole Eurozone is facing deflation due to falling prices of oil. Concerns over its debts will trigger more cash flow into the USA.
- Besides Europe, the economic growth in major countries of the world has slowed down.
- Oil prices are falling. This is beneficial for the economy of the USA as it decreases inflation and business costs.
- The inverse relationship between the dollar and oil price. Since the prices of oil are fixed in dollars, a falling oil price implies a rise in the value of the US dollar.
According to Kavan Choksi UAE, when the USA exports services and goods, the demand for the US dollar increases as customers pay for these services and goods. This means more foreign capital will enter the nation, making the value of the US dollar even stronger! Strong economies will invoke more investment from across the globe as investors will feel safe, and they will be able to enjoy a consistent return from their investments.