What moves the price of the US dollar?
All countries’ central bank will implement monetary policies to either increase of decrease inflation rates. The bank may, for instance, lower interest rates to encourage people to borrow money. Borrowed dollars eventually get spent by consumers and businesses, which stimulates the economy. At the same time, lowering interest rates weakens the dollar, which can lead to a fall in its value
Inflation is the increase in the cost of goods and services in an economy. When the US inflation rate rises, USD’s value will fall. This is because higher inflation means the cost of goods and services in the country is rising.
Inversely, a falling inflation rate will increase the US dollar’s value as goods and services become cheaper more attractive for other nations to buy – thus pouring money into the economy and strengthening the dollar
A country can ensure its currency stays in demand by exporting products that other countries want to buy, and demanding payment in that country’s native currency. The US dollar is what’s known as a reserve currency. This means it’s used by nations across the world to buy commodities, meaning demand for it will also be high.
If another country, eg China, manages to attain reserve currency status for its local tender, this could negatively impact the desirability of the US dollar – which will cause its value to drop
The US dollar’s value will rise or fall depending on how the US economy is growing. A weak economy will lead investors to withdraw and take their money elsewhere
