Currently, the Bloomberg Dollar Spot Index is near a five-month high, showing significant gains against major currencies such as the South Korean won, the Japanese yen, and the Swiss franc in recent months. This trend has caused concerns among finance ministers in South Korea and Japan, who fear that it may negatively impact their economies. However, these fears are not causing widespread panic on a global scale.
In contrast to previous episodes of dollar strength, the current situation is not something that poses a major threat to the US or the global economy as a whole. While the strong dollar may cause some minor disruptions abroad, for the most part, it is having little impact on the US economy. This sentiment still holds true today, as Treasury Secretary John Connally famously said during the Nixon administration that although the dollar may be our currency, it becomes other countries’ problem.