On Wednesday, the Federal Reserve hit pause on its benchmark interest rate after hiking 10 times in a row in a battle to cool the US economy and tame inflation. That rate-hiking campaign has also done something else: helped pump up the US dollar, maintaining an unexpected strength that reverberates across the economy. However, with the Fed’s pause, many experts believe the dollar’s muscle could start to give out.
That’s not the only way a strong dollar may hurt American workers and businesses, according to Gagnon. While Americans may find trips abroad relatively cheaper during times of dollar strength, tourism to the United States may take a hit. “It makes it more expensive for foreigners to come to the US, which reduces demand for US restaurants, hotels and attractions,” Gagnon said. Stronger than expected The US dollar is often called a “safe haven currency” for its perceived stability.