It is no secret that the Corona Virus Pandemic is a situation that greatly affected all of us, worldwide. Many aspects of our lives have been impacted, including the global economy. Now, although we are currently still experiencing this pandemic, we are also experiencing the consequences of the pause there was on the economy in 2020.
The rise of the dollar has been significantly rising, particularly over the last couple of weeks, and it has become a hot topic. According to “The U.S Economy Today,” the dollar is reaching levels that haven’t been reached in nearly 20 years. “Since the start of this year, it has gained 8 percent, and in the last 12 months, it has risen 14 percent.” As we are experiencing inflation after the pandemic, due to there being a stop in production of goods, prices are now spiking in almost everything. We are also experiencing some drastic situations around the world, such as times of uncertainty with the war between Ukraine and Russia, the zero-COVID policy in China, global sanctions on Russia, soaring commodity prices, and Europe and Japan’s economic slowdown. This caused global investors to store their cash in the U.S. for “safekeeping,” which consequently contributed to the dollar to going up.
The U.S. is buying more goods from other countries, which is helpful, however, this is causing things to get more expensive in other countries. As commodities such as oil and nickel are priced in dollars, this means other countries have to pay more to convert their currency into dollars to buy it. The Federal Reserve is trying to fight high inflation in the U.S, and according to the article “U.S. dollar touches 20-year high as markets shun risk,” Minneapolis President of the Federal Reserve Neel Kashkari said the U.S. bank may not get as much aid from easing supply chains as it is hoping for in helping to cool inflation. The Federal Reserve is making attempts to help lower inflation without tilting the economy into a recession, however it is expected there will be more rate hikes. It is a dangerous time for the economy, and there is speculations and chances of a recession.