“In God We Trust” has been inscribed on all US paper and coin currency since former president Dwight Eisenhower mandated it in the 1950s. Americans generally believe in the afterlife, but also in their dollar – and they are not the only ones. The currency has become one of the few attractive assets in a global economy threatened by war, recession and an energy crisis. International investors, besieged by plunging stock markets, bonds and cryptocurrencies, are flocking to the US dollar like lost travelers diving into a desert oasis. But its strength against other currencies is having major impacts on governments, businesses and individuals.

Unlike other capital markets, the foreign exchange market is usually not very volatile. Apart from sporadic episodes such as investor George Soros’ 1992 attack on the pound sterling or occasional collapses in emerging economies, currency fluctuations tend to be minor. But that tranquil stability is changing. Interest rate hikes by interventionist central banks have triggered the current foreign exchange volatility, causing the price of money to fluctuate dramatically and plunging national currencies into a competition that has only strengthened the US dollar. The Japanese yen has dropped by more than 20% against the US dollar in a year; the pound sterling and the euro have dropped by more than 15%; and the Chinese yuan by more than 10%, its sharpest decline since 1994.

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