How the U.S. Dollar Made a Spectacular Turnaround That Took Everyone by Surprise
The currency's surge has serious ramifications and may be a factor as the Federal Reserve considers whether to raise U.S. interest rates
Perhaps the biggest story in financial markets is the rise of the U.S. dollar.
After starting to rally in early 2014, the dollar is now at its highest level since 2003. What's striking is not just the rise but the change in attitude. Just a few years ago people were talking about how the dollar was doomed, due to a range of factors. Now all those stories are reversed.
The dollar's surge has some serious ramifications. A strengthening dollar is a headwind for U.S. exporters. Conversely, imports from other countries become more competitive.
The strong dollar may also be a factor for the Federal Reserve as it considers whether to raise interest rates.
And the dollar story doesn't just affect the U.S. Many companies in other countries have borrowed in U.S. dollars, and as the dollar rises, paying those debts will get more expensive.
Bottom line: Everyone, from central banks, to currency traders, to exporters around the world, is watching this move.
9:38 PM ICT
March 12, 2015