CARTOON BALL: American standard cartridges are seen at the US dollar exchange rate at a supermarket in New York City, United States on February 12, 2020.
A similar basket of the new $1.50 US-Dollar currency is seen at a kiosk in Singapore, United Arab Emirates, February 14, 2020.(Photo by Spencer Platt/Getty Images)US dollar circulation is up 5% over last year, as investors look to secure cash in times of economic uncertainty, Bloomberg Markets Chief Economist Michael Deogan said in a note to clients.
“For investors who are concerned about the outlook for the dollar and inflation, the new cycle of USD exchange rate movements is an excellent time to purchase U.S. dollar-denominated securities,” Deogan wrote.
“It is worth noting that the US-dollar cycle has a relatively short period of time, so even when it is trading above the previous peak, it will still be short of the level seen prior to the peak in November 2020.”
The chart below shows how the dollar exchange rates move around the world:For investors looking to secure dollars for retirement, Deogan added, the dollar’s upward trend can be offset by higher inflation in the United States.
The currency has lost some ground since the Federal Reserve raised interest rates in December, and has lost ground in recent weeks.
But, Degan said, investors should not take too much comfort from the new USD trend.
“The dollar’s rally from around $100 to as high as $1 in November of last year has not been entirely reversed and, while it appears the U.K. may have recovered from the Brexit shock, the same cannot be said for the United Kingdom,” Degan wrote.
“As such, investors will need to take into account the volatility of the dollar, and the risks of rising inflation in 2018 and 2019 if the U,S.
and UK continue to trade in excess of the Fed’s 2% inflation target.”
To see how US dollar-based investments perform in the future, check out our interactive chart: