The Strengthening Dollar: A Crisis for Big Tech?
1. The Rising Dollar Index The U.S. dollar has been on a strong upward trend, with the Dollar Index (DXY), which measures the dollar’s value against a basket of six major currencies, surpassing 108 as of December 2024. This marks an approximately 7% increase compared to the previous year, indicating a persistent strengthening trend. This surge is not just a temporary fluctuation but a result of structural factors, including U.S. economic policies, Federal Reserve monetary decisions, and global financial market shifts. The U.S. economy’s strong recovery, combined with high employment rates and the Fed’s commitment to higher interest rates, has contributed to the dollar's appreciation. 2. Reasons Behind the Dollar’s Strength 1) Federal Reserve’s Tight Monetary Policy The Federal Reserve has maintained high interest rates in response to inflation and economic recovery. Higher interest rates attract global investors seeking better returns, increasing demand for the U.S. d...