The current trend of a strong dollar is causing some challenges for economies abroad, but it is not significantly affecting the US economy. This sentiment holds true even today, as the Bloomberg Dollar Spot Index is near a five-month high, showing significant gains against major currencies such as the South Korean won, the Japanese yen, and the Swiss franc in recent months.
During the Nixon administration, Treasury Secretary John Connally famously told a group of central bankers that although the dollar may be the United States’ currency, it becomes other countries’ problem. This sentiment still holds true today, as finance ministers in South Korea and Japan have expressed concerns about this trend. However, it is not causing widespread fear on a global scale.
Unlike previous episodes of dollar strength, the current situation is not something that poses a major threat to the US or the global economy. The strong dollar may cause some minor disruptions abroad, but for the most part, the US economy remains unscathed by its effects.