Stocks and Funds to Profit from a Strong Dollar

Among the many challenges confronting investors in 2022 is the dizzying rise of the U.S. dollar. From the start of the year through September 9, the Dollar Index (DXY (opens in new tab)) surged 14%, reaching its highest level in 20 years. The three largest components in the index’s basket of currencies—the euro, Japanese yen and British pound—have all slumped 15% to 25% against king dollar over the past 12 months.

Exchange-rate movements are driven by an amalgam of factors including interest rates and monetary policy, inflation and economic growth, trade balances and perceived geopolitical risk. For example, higher U.S. interest rates and aggressive Fed monetary tightening help to strengthen the value of the dollar. So does the relative strength of the U.S. economy compared with Britain, the eurozone and Japan. 

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