The Economist explains

Why the dollar is so strong

A weak starting point, rising interest rates and safe-haven status have made for a huge rally

PRAGUE, CZECH REPUBLIC - JULY 13: Men stand at a money change shop showing exchange rates of leading currencies including the U.S. dollar and the Euro against the Czech koruna on July 13, 2022 in Prague, Czech Republic. The dollar has been rising in value against the Euro and the British pound in recent months and is now approaching parity in value against the Euro. (Photo by Sean Gallup/Getty Images)

IT IS A good time to be an American tourist in Europe. Earlier this month the euro briefly dipped below parity with the dollar for the first time in two decades. But there is no need for Americans to confine their travels to Europe. Almost everywhere in the world is cheap for them these days. This year the dollar is up by 15% against the yen, 10% against the pound and 5% against the yuan. Why?

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