Factors Influencing the Value of the US Dollar
The value of the US dollar is constantly changing due to various economic and political factors, including:
- Interest Rates – Higher interest rates attract foreign investors looking for better returns, increasing demand for the dollar.
- Inflation – When inflation is high, the purchasing power of the dollar decreases. Low inflation helps maintain a strong currency.
- Federal Reserve Policies – The US central bank (Federal Reserve) controls monetary policy, influencing interest rates and money supply.
- Economic Growth – Strong economic performance boosts investor confidence in the dollar, while economic downturns can weaken it.
- Geopolitical Events – Wars, trade disputes, and global crises can impact demand for the dollar as investors seek safe assets.
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