The U.S. dollar is on track to post its best annual performance in nearly a decade, bolstered by a strong economy and rising demand. According to Bloomberg, all major developed-market currencies have fallen against the greenback, which has gained 7% since the start of the year—its best performance since 2015.
In early December, the dollar reached its highest level in over two years, following the Federal Reserve’s decision to lower interest rates, despite a slight slowdown in monetary easing. “The primary driver of the dollar this year has been the strength of the U.S. economy,” said Skylar Montgomery Koning, a currency expert at Barclays.
The robust economy is expected to prompt the Fed to initiate a cycle of more gradual rate cuts, helping maintain the dollar’s historically high valuations.
In 2024, the Japanese yen, Norwegian krone, and New Zealand dollar were the worst-performing major currencies, each falling more than 10% against the dollar.
The euro lost 5.5% of its value, with some experts predicting a possible parity with the dollar in 2025.
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