Strength of the Dollar as the World's Reserve Currency
The article discusses the recent rally in US risk assets and the strength of the dollar as the world's reserve currency, highlighting factors such as US economic resilience, productivity growth, technological prowess, and strong returns on US assets. Dollar strength is attributed to longer-term macro factors rather than short-term cycles.
Key Points
- US economic resilience fuels dollar strength
- Productivity growth and technological advancements support the dollar's dominance
- Strong returns on US assets contribute to the greenback's vitality
Pros
- US economic strength and productivity growth
- Technological prowess and AI dominance
- Strong returns on US assets
Cons
- Potential drag on corporate profits due to a stronger dollar
- Increased costs of imports for other nations
- Potential inflationary pressures and higher interest rates