ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The dollar has been gaining strength against the currencies of other major economies. The dollar is strong because the US economy is healthier than those of many other countries and because the Federal Reserve keeps raising interest rates.

Detailed explanation-2: -The U.S. dollar appreciates when demand for the currency rises relative to demand for other currencies. This might happen in times of weaker growth prospects outside of the U.S. or in times of increased global uncertainty, as U.S. government assets benefit from being perceived as a safe haven.

Detailed explanation-3: -The strong dollar feeds into inflation pressures abroad. When a country’s currency weakens against the dollar, the price of imports from the United States rises, putting pressure on prices. On average, the pass-through of a 10 percent dollar appreciation into inflation abroad is 1 percent.

Detailed explanation-4: -Currency appreciation is an increase in the value of one currency in relation to another currency. Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances, and business cycles.