![]() ![]() Given this higher rate in the U.S., international capital should flow from other countries to the U.S., resulting in the dollar’s appreciation.” Louis explains, “If the Fed raises interest rates while other central banks maintain or even lower their interest rates, then the return on savings is more attractive in the U.S. The higher interest rates rise, the more demand for the dollar there is from international investors seeking yield. In the past year, the Fed has raised interest rates eight times to a current target range of between 4.5% and 4.75% in an aggressive attempt to curb inflation. There are a number of reasons the dollar gains strength in the market. A strong dollar reflects an increase in the dollar’s value relative to other currencies around the world. But the buying power of a single dollar also changes over time. investors typically measure the value of goods, services and investments in dollars. dollar could have significant implications for inflation, international trade, technology stocks and fiat currency alternatives such as gold and Bitcoin (BTC). economic outlook for 2023 uncertain, the path forward for the U.S.
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