The Dollar's Coming Slide Will Be Welcomed by the World
The greenback is set to weaken as the Fed changes its monetary policy stance.
The dollar is losing its luster.
Photographer: Kirill Kudryavtsev/AFP via Getty Images
The dollar has lost some of its luster over the winter. The twin supports of its status as the preferred haven during the pandemic and being backed by the world’s strongest economy are fading. And now another prop for the greenback is wobbling amid doubts about how much higher the Federal Reserve will raise US interest rates as it has second thoughts on the likelihood of a recession. The dollar looks likely to suffer an extended bout of weakness.
This has no bearing on the dollar's unrivalled position as the global reserve currency: King Dollar sits serenely on its throne. But what's not so good for the dollar's relative value is better for the rest of the world, because less focus is needed on keeping up with the dollar. This has led to oversized interest rate hikes to shore up currency valuations, above and beyond what monetary policy has needed to do to address specific domestic requirements on fighting inflation.