Name: Why a Strong Dollar Is a Double-Edged Sword for the U.S. Economy | WSJ
Uploaded: 2022-07-31T08:44:59.000Z
Duration: 5 min 44 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Adverbs of manner

Not literally, but its value has reached its highest point

The increase fits into a theory known as the dollar smile.

It says the dollar typically gets stronger

Like when it saw a period of economic growth in 2014

or when the global economy faces unexpected shocks,

is on a downward trend compared to the rest of the world.

- So the dollar reaching multidecade highs.

We also have people that are very worried

I mean, normally this kind of increase comes like over time,

- [Narrator] While a strong dollar might seem

it's impact across the world can be more complicated.

and the unexpected consequences it can have

One of the main reasons the dollar remains attractive

to investors at both ends of the economic spectrum

is because it is a dominant global reserve currency,

which means every country keeps a certain amount

- For foreign economies, the wide use of the dollar

allows borrowers to have access to a broad pool

- [Narrator] According to the international monetary fund,

nearly 7 trillion U.S. dollars are held by 149 countries.

- Investors like the dollar because it's stable.

where there's a central bank that is stepped in

to shore up markets and intervenes in the economy

at whatever cost to make sure it doesn't crash.

- [Narrator] Because so many countries rely on the dollar

But that demand fluctuates and depends largely

investors bet on economic growth that will lead

- If you're buying currencies, you wanna hold the one

that's gonna give you a higher rate of return

that's linked to your central bank's rate.

- [Narrator] On the other end of the smile,

investors can flee to the dollar as a more secure asset.

- So the dollar's benefited from basically

a confluence of events, volatile financial markets,

fears around growth in the global economy,

supply chain issues stemming from the fact

So all of that combined has people basically jumping

- [Narrator] A haven is an asset that can retain

or even increase its value during an economic downturn.

The dollar's strength is determined by measuring it

When it gets stronger, other currencies grow weaker

In July, the dollar and Euro reached parity

And as the value of other currencies fall,

The dollar is the main currency used in global trade.

That means that things like food and energy

are usually priced in dollars when they're bought

- So basically their currency's weakened,

which makes everything more expensive for them,

which means price increases, which is inflation.

So you're basically, there's this concept

- [Narrator] But a strong dollar can actually have

because it makes importing goods and services cheaper.

It makes traveling abroad for Americans cheaper.

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Why a Strong Dollar Is a Double-Edged Sword for the U.S. Economy | WSJ

equivalent

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