Printing and strengthening the monopoly dollar to buy things cheap from the world

 Dollar’s Resurgence Is a Headache for the Rest of the World

Surging Treasury yields help send the U.S. currency to its best quarter in a year

The dollar has bounced back with a vengeance, threatening global central bankers’ tricky task of bringing down inflation while protecting fragile economic growth.

The greenback on Monday reached its highest level of the year, bringing its gain since mid-July to 6.6%. The WSJ Dollar Index last week closed out its best quarter since last fall, when it was in the midst of a once-in-a-generation run-up. Some emerging-market currencies have been hit especially hard, with the dollar rising 11% against the Chilean peso and almost 8% against the Hungarian forint.

The dollar’s strength has been driven by surging Treasury yields. The 10-year U.S. Treasury yield reached a new 16-year high Monday of 4.682%. Investors have grown more convinced of the U.S. economy’s resilience—and that the Federal Reserve is likely to keep borrowing costs higher for longer than it would do in a typical business cycle.

Any big currency move produces both winners and losers. In the U.S., a strong dollar is politically popular and largely good for consumers because it holds down inflation by keeping import prices in check, and makes trips abroad cheaper.

For the rest of the world, however, the return of the strong dollar is a largely unwelcome development. In many countries, interest rates are at their highest in years or decades, already increasing the risk of financial stress. The combination of those higher rates, a stronger U.S. currency and elevated oil prices spells lower growth across the world and more financial vulnerability.

U.S. companies with big overseas businesses like Apple are also getting hit as the value of their overseas revenue falls in terms of the U.S. currency and their goods become more expensive for foreigners.

“The strong dollar is overstaying its welcome. It’s starting to become a problem again,” said Chris Turner, head of foreign-exchange strategy at ING.

The greenback is still by far the most widely used currency for global trade and finance, which means its fluctuations ripple far outside of the U.S. Commodities, like oil or wheat, are usually priced in dollars. And governments, companies and households around the world have borrowed trillions of dollars in the U.S. currency. When the dollar’s value rises, it gets more expensive for others to buy imports or repay their debts.

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