The US dollar has been falling for over a year and that has ramifications for investors across the globe. Predicting currency movements is nigh-on impossible, but it’s important for investors to understand how they affect their investments.
The dollar index measures the US dollar’s value against a basket of six key currencies: the euro, the Japanese yen, pound sterling, the Canadian dollar, the Swedish krona and the Swiss franc.
As you can see from the chart, the index can be volatile. The dollar hit a 20-year high in September 2022, before falling 12.5 per cent over the next 10 months, and then rising about 7 per cent to early October.
The dollar normally rises when the US Federal Reserve raises interest rates (which it has
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