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Expert Opinion

Surging Dollar Is a Mixed Blessing for the U.S.

A strong dollar helps the U.S. reduce imported inflation, but it also could destabilize the global economy, which is still trying to come to grips with declining growth and high inflation.

By Mohamed A. El-Erian | September 05, 2022 at 03:51 PM

As U.S. markets were closed to mark the Labor Day holiday, the dollar index surged to a new three-decade high.

This is a reminder that the dollar index is a relative, rather than an absolute, price—that is, it measures the value of the dollar relative to other currencies. But this also signals that while the U.S. is likely to outperform other countries in most global macroeconomic scenarios for the year ahead, policymakers and market participants still need to keep a close eye on what’s going on elsewhere in the world, as global events will have a meaningful impact on the overall well-being of the United States.

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