By: Evan Yang

Since the pandemic, the U.S. and the rest of the world have experienced no shortage of economic troubles. But one of the most pressing issues is the growing inflation rate. The current rate of 9.1 percent is the highest since 1981. However, the U.S. dollar is growing in price thanks to aggressive interest rate hikes by the Federal Reserve.

This spike in the price of the U.S. dollar—nearly 12% this year— marks a two-decade high, compared to other currencies. Some notable examples include the Mexican peso, where one dollar can be exchanged for 20 pesos. Several years ago, that rate was one dollar to just 12.5 pesos. The value of the euro is also nearly equal to that of the U.S. dollar for the first time in 20 years. The European Central Bank is looking to raise interest rates to combat similarly high inflation rates. Weakened European currencies also make energy imports like oil, which is priced in USD, more expensive. Other U.S. exports are also becoming more expensive for foreign buyers, hurting American companies.

The war in Ukraine has also partially caused the fall in the price of the Euro. A lack of supply has sent the price of Russian natural gas soaring. These growing prices have forced many countries to consider rationing energy. A looming European recession could pose a problem for overly-indebted nations.

However, there is a positive for Americans. A more robust dollar provides some amount of relief from the inflation rate, and foreign travel has never been cheaper. Imported goods, from computers to medical equipment have also become less expensive for U.S. consumers. Overall, the dollar expected to be continue growing in price.