Doha -
The US dollar recorded record highs recently against various other major currencies such as the euro, yen and pound sterling, before losing a little of its gains on Tuesday.
The dollar index rose 40% from its lowest level in 2011.
What are the reasons for that?
Is the strength of the dollar important?
Who are the winners and losers of his strength?
We learn about this by monitoring what was reported by a number of international newspapers by experts, and what Al Jazeera Net learned.
The story of the strong dollar
Writing in the Financial Times, writer Martin Wolf believes that the strength of the US currency is important, as the dollar tends to impose deflationary pressures on the global economy.
He believes that the US capital markets and the dollar play a much larger role than the relative size of its economy suggests, as its financial markets are the world's markets and its currency is a safe haven in all countries.
Thus, when financial flows change direction to or from the United States, everyone is affected.
For his part, financial advisor Amr El-Sayed says, in an interview with Al-Jazeera Net, that the idea of a strong dollar has become a policy adopted by the United States of America since 1995, a policy that relies - as America thinks - that a strong dollar is in the interest of the American economy and the world at large.
He adds that a strong dollar will push foreign bond holders to buy US Treasuries.
Amr El-Sayed expects the dollar to continue its upward journey for another year.
The reasons for the collapse of the dollar
Economic analysts attributed the rise in the value of the dollar against the rest of the other major currencies to several reasons, the most important of which are:
The decision of the Federal Reserve (the US Central Bank) to raise the interest rate continuously and faster than the rest of the other major countries to curb inflation, at a time when America is expected to continue the journey of raising interest rates, a step that may enhance the value of its green currency more and more.
The high risks of a global recession, especially in Europe and China, and the dollar's consideration of a safe haven in these circumstances.
Against this background, capital began to flow out of European and Asian stock markets.
Demand to invest in the dollar as a tool to hedge against market fluctuations and face crises until the value of national currencies returns to their normal levels or rises.
Investors withdraw their money from the world's economies to put it in US assets to take advantage of the increase in interest rates.
The freezing of half of the Russian Central Bank's gold and foreign exchange reserves in almost all Western countries has undermined confidence in the euro, Swiss franc and British pound, according to a report in the Russian newspaper Vzglyad.
Winners from the strength of the dollar
According to analysts, the strength of the dollar:
It makes US imports cheaper, which benefits some industries and helps reduce inflation.
It stabilizes the US economy through trade because imports are cheaper, making it easier to replace domestic products.
It increases the revenues of deposits and pension funds, which serves the interests of pensioners and savers.
It benefits Americans in the United States when they travel to or reside in other foreign countries.
Helps US resident investors buy foreign bonds at low prices.
The depreciation of the currencies of the trading partners of the United States of America makes the companies of these countries more competitive, as their exports become less expensive.
The countries of Europe, Japan and China remain - according to analysts - satisfied with the value of their currency, and are in no hurry to raise interest rates, because raising the value of their currencies requires raising the interest rate to a large extent and outperforming the Federal Reserve, while its main goal is to reduce inflation rates and raise GDP, reduce unemployment and maintain balance.
The losers from the strength of the dollar
Analysts believe that the dollar's record rise against the currencies of the rest of the world will lead to:
Raising the prices of foodstuffs, fuel, medicines and other commodities imported by countries, especially developing and lower-income countries.
Many developing and lower-income countries defaulted on their dollar debts, and figures indicate that the total bad debts suffered by developing countries amounted to $250 billion, while global debts jumped to record levels of more than $305 trillion.
Rich countries are under pressure, as a weaker euro, for example, increases the cost of dollar-denominated imports such as oil, exacerbating the inflation problem in Europe.
Even America itself will not be spared the strength of the dollar, as this makes US exports more expensive and burdens exporting companies, causing some US exporters to cut production.
Raising the costs of travel, tourism and study in America.
What to do?
The New York Times report quotes some economists as saying that the dollar is the world's dominant reserve currency, which means that the United States, and thus the Federal Reserve, is obligated to take into account all interests of dollar stakeholders, including Coordination with other central banks to ensure that they do not over-tighten monetary policy.
The report warned that if the Fed's rate hike causes growth abroad to stagnate, it will slow growth in the US.
If the Fed and other central banks do not take into account such rebound effects, they may over-tighten their policies.
"There is a risk that central banks will jointly trigger an unnecessarily severe global recession," says Maurice Obstfeld, an economist at the University of California and former chief economist at the International Monetary Fund.
At a time when international coordination may help achieve the desired goals of monetary policies, US Federal Reserve Chairman Jerome Powell finds it difficult to talk about cooperation in a world where people enjoy very different levels of interest rates.