The Good, Bad, and Ugly of US Dollar Strength

Along with protracted supply chain disruptions, the war in Ukraine, and bad weather events, the strong US dollar is another source of inflation for many economies. Consequently, higher inflation is forcing central banks spanning the globe to engage in more aggressive monetary policy tightening to wrestle inflation to the ground. Hence, the risk of slower global growth and even another global recession rises with further US dollar appreciation.

Against this backdrop, businesses should gird themselves for another patch of global weakness over the next nine to 12 months. Hence, executives should seek ways to reduce input costs and protect profit margins proactively, including increasing efficiency, automation, remote work when applicable, renegotiating contracts, purchasing in bulk, capping hiring plans, limiting wage increases, and discretionary spending cuts.