The USD has always been present in every corner of the global economy, the currency in which important raw materials are bought and sold, and the safe haven that investors seek when facing difficulties.
The greenback is at a 20-year high against other currencies in the world, partly due to expectations that the US Federal Reserve will raise interest rates faster.
Here are 10 reasons to be concerned as the US dollar appreciates, according to Reuters.
Overseas Americans
If you are an overseas US tourist, a strong USD will benefit you. A hotel, a meal or a designer bag are all cheaper if bought in London, French Riviera or Cancun. The opposite is true for travelers to the US - unless they have purchased a Disneyland ticket or a snack in Las Vegas before, otherwise it would be more expensive.
Balance with the euro
A strong US dollar is an advantage for Americans traveling to one of the 19 countries using the euro and a small comfort for European tourists in the US. There is no need to calculate to switch between USD and euro - because the USD/ euro exchange rate is currently almost flat.
made in America
For shoppers around the world looking for top US brands, a strong US dollar means they could pay for insurance until local distributors try to reduce the impact of the currency.
In recent days, US companies such as Mattel Inc - a manufacturer of Barbie puppets and Hot Wheels cars - have said they are seeing a boost from the rising USD, even as consumers in general are willing to accept higher prices.
For consumer goods giant Procter & Gamble - a manufacturer of daily products such as Pampers or Ariel - the increase in the USD always tends to have a similar impact on sales.
Difficulties
For Argentina, the increase in the value of the USD against the peso means the price of domestic goods has doubled in just one year and swung deeper into an economic crisis. Governments and businesses in many emerging economies seek financial resources by issuing USD bonds. Therefore, the debt amount has increased in value when calculated in local currency. Exploiting the market to get more credit has also become more expensive as the USD exchange rate increases.
Raw materials
Countries such as Turkey and Egypt, which import a lot of raw materials, were hit by double damage. Most prices of goods from crude oil to wheat are calculated in USD, meaning they are paying more in local currency for each barrel of oil or wheat grain. This comes as prices of those items have been high for years due to the Russia-Ukraine conflict, harsh weather and the COVID-19 pandemic.
Subsidy
A strong US dollar is good news for people in poorer countries such as Mexico and Guatemala - who depend on hoiines sent back by relatives working in the US. In 2020, the COVID-19 pandemic dealt a heavy blow to this amount of bribes, but it has recovered steadily since then.
Inflation
Even for richer countries like Germany, a strong US dollar could cause problems as it puts fuel in a record high of inflation due to higher import costs. Local central banks often respond by raising interest rates, which makes credit worse and slows economic growth.
Russian ruble
The Russian ruble is the only currency in the world to appreciate against the US dollar this year - a surprising result for a country under international sanctions for its military campaign in Ukraine.
relying on foreign exchange control measures - does not bring many benefits to ordinary Europeans. Moscow could earn tens of billions of dollars a month from selling energy to the West, but Russian households still cannot withdraw their foreign currency savings. And many Western brands from Adidas to H&M and Ikea have stopped selling in Russia since the start of the Ukrainian war.
Bitcoin
Marked as the ultimate shield against inflation, the world's largest cryptocurrency has failed to fulfill its promise and has fallen more than half this year despite soaring consumer prices in many parts of the world. Private investors caught eye by cryptocurrencies in the bull market last year have now given up Bitcoin to switch to USD - a currency they consider safer.
Beef prices increase
If the price of a hamburger does not increase, the USD may actually be too strong and will certainly decrease again. The Economist's Big Mac index - a price comparison index for popular meatball steaks around the world - shows that the greenback is priced too high compared to all except some currencies. The dollar is the most expensive - and a Big Mac is the cheapest for American tourists in Venezuela, Romania and Indonesia. In Switzerland, Norway and Uruguay, the opposite is true.
