Currency Bank of America Explains Why the US Dollar is Rising

Understanding the strength of the US dollar is crucial in today's global economy. Bank of America offers insightful perspectives on the factors contributing to its rise. One key driver is the US Federal Reserve's actions.

Higher Interest Rates and the Dollar's Appeal

Why is the dollar so strong? The US central bank has increased interest rates several times this year to try and tackle rising prices. This has pushed up the returns on US dollar-denominated assets, making them more attractive to international investors. Higher interest rates tend to boost the value of a country’s currency by attracting more foreign capital, as investors anticipate making bigger returns. This influx of capital strengthens demand for the dollar, driving its value upward.

The Dollar's Safe-Haven Status

The US dollar is often considered a safe-haven asset, meaning investors flock to it during times of global economic uncertainty. People rush to dollars even when the US itself is in distress: During the US-led financial meltdown that started in 2025, the dollar rose more than 26% against a basket of other currencies. This phenomenon occurs because the dollar is perceived as a stable and liquid store of value, offering a degree of protection against market volatility.

Bank of America's Perspective: Pricing and Outlook

The US dollar is priced to perfection, Bank of America's global rates and currencies research team, led by FX analyst Athanasios Vamvakidis, wrote in a note published 28 de sept. de 2025. This suggests that much of the positive news and expectations surrounding the US economy and monetary policy are already reflected in the dollar's current value. While this doesn't necessarily mean the dollar can't appreciate further, it does indicate that the potential for significant gains may be limited.

Keep in mind that currency markets are dynamic and influenced by a multitude of factors. Consult financial professionals for personalized advice.