The dollar remains the strongest currency for a generation, managing to devalue currencies around the world in turbulent times, when its value increases and crumbles, in a way, the economy other countries.

As the dollar protects itself, the global economic outlook is disruptedsince the US currency lubricates global finances.

90% of transactions carried out in foreign currencies are represented by the dollar, the latent enemy of the weakest currencies.

The New York Times has published an analysis of the image represented by the invincible dollar against other world currencies.

What makes the dollar so powerful?

The dollar is catapulted as the most important currency in the world and tends to go higher in times of turbulence, this being an economic phenomenon that causes investors to regard the currency as stable and relatively safe.

The dollar has gained ground in recent months due to rising inflation, interest rates and growth prospects have deteriorated.

According to the analysis, the main way to measure the strength of the dollar is to peg it to a basket of currencies major trading partners such as Japan and the euro area.

Which means the dollar is at its highest level in 20 years, having gained more than 10% in 2022, which is quite a move for an index that generally changes in small fractions each day.

This index is composed of the euro, the Japanese yen, the pound sterling, the Canadian dollar, the Swedish krona and the Swiss francweighted against the US dollar.

In context: how does it affect the global economy that China is not developing as expected?

The fall of other currencies against the dollar

There are days, the yen fell to its lowest level in 24 years against the dollar and the euro was at a one-to-one exchange rate with the dollar, after 20 years.

Many world currencies, including the Colombian peso, have lost value against the dollar in recent months.

It’s a very, very strong dollar, said Mark Sobel, a former US Treasury official.

That’s why, as central bankers around the world try to control inflation by raising interest rates, the Federal Reserve is acting faster and more aggressively than most.

This situation “not only increases fears of a recession, but the United States also looks better than the rest of the world”.

Faced with the dizzying rise of the dollar the most affected are the countries where the debt in dollars It accounts for a large portion of a country’s GDP.

Paying interest in dollars has become difficult for countries whose currencies depreciate rapidly as in Argentina and Turkey, since the interest rates of all debt also increase.

The dollar has yet to beat all currencies in 2022. The Russian ruble was one of the best performing currencies against the dollar.

High oil and gas prices, as well as capital controls imposed by Russia will keep the money inside the countryprotected the official change.

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