I understand that the demand increased for dollar in the past couple of years but still, with the recent 40% increase in its supply I would’ve expected some sort of a drop in value.
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The US has had a few economic policies that have ensured that when global economic outlook is bleak the traditionally safe investments are tied to USD. US T-bills, gold, and oil are often used as safer investment vehicles when the markets turn volatile. My understanding is that a lot of international transactions of gold and oil gets conducted using USD pricing even if the US is not at all involved. This all creates a demand on currency markets for USD which drives up the price.
I’m not an economist but looked into this when in the 2008 financial crisis the USD seriously outperformed other currencies. It seemed odd to me that the source of all of this bad debt on inflated fixed assets should have their currency rise against countries who in theory wouldn’t have been hit nearly as hard by the burst bubble.
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