From Connally’s quote to the present day: The strong dollar and its impact on economies abroad

The strong dollar has been a topic of concern for economies abroad, as Finance ministers in South Korea and Japan have expressed worries about its recent gains against major currencies. However, the Bloomberg Dollar Spot Index is currently near a five-month high, showing significant gains against the South Korean won, Japanese yen, and Swiss franc. Despite these concerns, the US economy remains relatively unscathed by the effects of the strong dollar.

During the Nixon administration, Treasury Secretary John Connally famously told a group of central bankers that although the dollar may be the United States’ currency, it becomes other countries’ problem. This sentiment still holds true today, as the strong dollar can cause minor disruptions abroad but has not significantly affected the US economy. Unlike previous episodes of dollar strength, this current situation does not pose a major threat to global stability or prosperity.