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Mohamed A. El-Erian

A Surging Dollar Is a Mixed Blessing for the US

A stronger dollar may make it easier to deal with inflation, but it doesn’t bode well for the global economy.



Photographer: DANIEL MUNOZ/AFP

As US 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 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 US is likely to outperform other countries in most global macroeconomic scenarios for the year ahead, policy makers 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 wellbeing of the US.