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The US dollar is asserting itself as the flagship currency of 2024, dominating the foreign exchange market without equal. While many global economies face challenges such as rapid inflation and geopolitical uncertainties, the greenback shows its best performance in nearly a decade. This spectacular progression is based on several solid pillars: a robust US economy, attractive bond yields, and a monetary policy skillfully orchestrated by the Federal Reserve. Added to this is a global context marked by the weakening of competing currencies, such as the yen or the euro, which are unable to compete with the supremacy of the dollar. This rise reflects the resilience of the United States but also highlights the economic fractures shaking the rest of the world.
An Uncontested Rise in the Markets
In 2024, the US dollar recorded a rise of 7 %, according to the Bloomberg Dollar Spot Index, confirming its status as the undisputed leader among global currencies. This rise is based on several converging factors that reinforce investor confidence. The US economy, supported by robust indicators, continues to outperform its international counterparts. At the same time, the Federal Reserve, under the leadership of Jerome Powell, adopts a cautious monetary strategy. The latter has stated that interest rate cuts would occur gradually, thereby limiting speculation on drastic adjustments. Such a measured approach stabilizes the markets and fuels expectations of a consistent long-term monetary policy.
Meanwhile, US bond yields are reaching high levels, with a 10-year rate peaking at 4.641 %. This increased attractiveness of US assets diverts financial flows from other currencies, further accentuating the dollar’s lead. In contrast, competing currencies are suffering heavy losses. The Japanese yen registers a drop of 12 %, while the Norwegian krone and the New Zealand dollar also retreat. The euro, for its part, displays a notable decline of 5.5 %, trading at 1.04 dollars, a historically low level that rekindles concerns about an imminent parity with the greenback. Thus, the strength of the dollar is in line with current economic data, highlighting the resilience of the United States in a global context marked by increasing economic and geopolitical uncertainties.
The Global Consequences and Prospects
The triumph of the dollar goes beyond the currency market. Its impact extends to commodities and cryptocurrencies, revealing cascading effects on various segments of the global economy. Gold, despite a slight recent decline, records a remarkable annual performance with a 27 % increase. This movement, attributed to heightened geopolitical tensions and concerns related to inflation, reflects the central role of this precious metal as a safe haven. Meanwhile, bitcoin maintains a price close to 94,320 dollars, after reaching a peak of 108,000 dollars. However, volatility remains omnipresent in the crypto market, amplified by the expiration of options contracts totaling 14.5 billion dollars. This outcome could influence crypto trends in 2025, further reinforcing the uncertainty surrounding this sector.
However, the dominance of the dollar is not without consequences. Emerging economies, whose debts and imports largely depend on the US currency, are facing increasing pressures. The appreciation of the greenback burdens their financial obligations and complicates the balance of their trade. At the same time, trade tensions exacerbated by aggressive tariff proposals from Donald Trump add a layer of uncertainty to an already tense global context. While some observers praise the economic resilience of the United States, others question the sustainability of this dominance in a world marked by increasing economic and political fractures. Questions about the future of US monetary policy and the impact of these global imbalances remain open, making 2025 a year full of stakes and challenges to monitor.
The dollar, thanks to the consolidation of its role as a safe haven in 2024, sheds light on the fragile balance of the global economy. This undeniable success for the United States reflects the strength of their economic model, but it also heightens pressures on emerging economies and trading partners. As global imbalances widen, questions about the sustainability of this dominance multiply. As 2025 approaches, economic actors will have to face major challenges in a context marked by geopolitical tensions and enduring uncertainties.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
Source: Dollar’s Dominance, What It Means For The World
