Marketplace · Monday, September 14, 2026
The US dollar has seen a recent rise as currency traders anticipate a Federal Reserve interest rate hike. Experts suggest the dollar's strength, while not indicative of peak performance, stems from it being the 'least worst' option compared to other global currencies facing significant economic challenges.
“The US dollar has been on the rise the past couple of days. As currency traders look forward to an interest rate hike from the Fed following that report on August inflation. And while yes, there has been a lot of ink and audio tape spilled over the future of the greenback, as Marketplace's Stephanie Hughes reports, the dollar is still pretty attractive.”
“If the Fed hikes interest rates this week, like everybody seems to think it's going to do, that will drive up the yields on certain assets, including short-term government treasury bills. That means that investors can earn more by investing in those assets. And so they're more interested in holding them. But, says Brandeis Professor Carol Ossler, in order to invest in those assets, you need to have American currency. You got to get the dollars, which means they're going to go into the very active market for dollars. They're going to be selling euros, selling yen, selling Brazilian Real. And when there's more people trying to buy our currency, the value goes up.”
“Still. If you think of currencies as competing against each other, Cornell's Eashwar Prasad points out, it's not like the dollar is looking the fittest it's ever been. It's just the least worst of all the teams playing in a tournament. Prasad says, despite the blows the US economy has been hit with recently, tariffs, the war in the Middle East, it still looks less beat up than many other economies, including the EU, which hiked its own interest rate last week. The Eurozone, Japan, the United Kingdom, are all in a pretty deep economic and institutional funk.”