Rising US Dollar, Rising Global Risks

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Rising US Dollar, Rising Global Risks
Photo by geralt (Pixabay)

As US dollar hitting record highs, it is no longer a sign of global recovery but also becoming the world’s premier fear gauge and global risk.

Recently, US dollar hit its 13-year high. According to the ICE Dollar Index, which measures the currency against a basket of six other currencies, soared to 100.6, its peak since April 2003. In view of analysts, US dollar is fueled by rising government bond yields (and the Fed’s anticipated rate hike), and expectations of Trump’s fiscal expansion (infrastructure stimulus).

Furthermore, as the dust is settling after the Trump triumph, the magnitude of the win – which ensures a Trump White House, a Republican Senate and a Republican House – translates to the kind of political consolidation that America has not witnessed in generations.

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If Republicans find unity and Democrats remain fragmented, Trump could have a major opportunity to promote policies that would further stimulate the US economy, growth and the dollar.

However, the future path of the US dollar may not prove as rosy as anticipated.

Forces driving US dollar risks<