Dollar Strengthens 3.64% on Yuan Depreciation and Yen Pressure

Friends who have heard the term "interest rate cut" may think it signals an economic improvement and currency depreciation. But have you ever wondered why, after the U.S. cut interest rates, the dollar actually strengthened?

Recently, we've seen the U.S. dollar index soar from 100 to 104 points, as if riding a rocket. Meanwhile, other currencies like the yen and euro plummeted, which is truly astonishing! Particularly in Japan, the yen depreciated nearly 8%.

What could be the reason behind this? Does the strength of the dollar indicate a revival of the U.S. economy? Or is it exploiting this volatility to "harvest" from other nations? Today, let's uncover the secrets behind this phenomenon.

First, we need to clarify why the Federal Reserve has decided to cut interest rates. Many believe the purpose of rate cuts is to stimulate the economy, but the reality is much more complex than that.

When the Fed opts to lower rates, many countries expect the dollar to gradually weaken. However, the outcome was surprising: the dollar not only failed to weaken, but actually continued to rise.

This phenomenon hides an underlying desire for the U.S. to control the global economy. It's akin to a boss who possesses absolute authority; although they choose to loosen policies, they still maintain a firm grip on the situation. You may wonder, what is the reasoning behind this?

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By cutting interest rates, the U.S. "manufactures" a market sentiment to increase capital inflow, thereby maintaining the strong position of the dollar.

The strategy of the U.S. is clear: while lowering rates, it uses the strength of the dollar to influence other countries' currencies. For instance, the recent sharp depreciation of the yen is not solely due to Japan's economic policies but is also inseparably linked to the strength of the dollar. The U.S. uses this volatility to force other countries to endure greater economic pressure.

Turning to the Eurozone, the euro has also depreciated by nearly 3.7%. This indicates that, in the global economic environment, every step taken by the U.S. is a "harvest" of resources from other nations. These seemingly distant economic figures have a profound impact on each of our lives.

For example, when the yen depreciates, the prices of imported goods rise, resulting in higher bills at supermarkets for all of us.

The nearly 8% depreciation of the yen will undoubtedly impact Japan's economy. Many ordinary citizens might think this is merely a financial matter, but in reality, it means that prices in Japan will continue to rise, and the cost of living will increase accordingly. The same principle applies to the euro’s depreciation, which will compel European consumers to pay more during their daily shopping.

In this wave of change, the Chinese yuan has shown relative stability. This contrast raises the question: how has the yuan managed to remain resilient amid such turbulence? This is closely related to China's economic policies, which have enabled it to maintain currency stability in the face of external pressures, showcasing a strong economic foundation and capacity to respond.

Although the yuan has also experienced some depreciation, the extent has been relatively small at about 1.7%. This suggests that, amid global currency turmoil, the yuan is appearing more resilient. This does not imply that China is lacking challenges, but rather that it is gradually adapting its financial policies and economic structure to these changes. Such resilience offers a certain assurance for the rest of us.

Whether you are a business owner or an ordinary consumer, a stable yuan means our purchasing power will not be significantly affected. When we observe the relative stability of the yuan, perhaps we can breathe a little easier, avoiding the need to tighten our wallets with every purchase.

Sino-American trade relations are undoubtedly complex and ever-changing, featuring both cooperation and conflict. Against this backdrop, the strength of the dollar and the depreciation of other currencies reflect the ongoing power struggle between the two nations. When the U.S. attempts to suppress the Chinese economy with a strong dollar, how should China respond?

We all know that behind Sino-American trade lies each country’s economic interests. While the U.S. seeks to maintain its economic dominance, it also challenges the global economic order. At this time, the stability of the yuan not only resists external pressures but also reflects China's own economic resilience.

So, where will the Sino-American rivalry lead in the future? In my view, ordinary citizens play a crucial role in this process. Our consumption habits and investment choices will directly influence the direction of the national economy. Every consumer is a part of the economy, a participant in this contest.

If the U.S. continues to suppress the Chinese economy, it may affect our living standards, prices, and job opportunities. Conversely, if China can find opportunities in this turmoil to enhance its economic resilience, it may open new possibilities for our future.

In conclusion, the strength of the dollar is not merely a reflection of the American economy, but a competition within the global financial landscape. Understanding this is not just an academic need, but a reality we all must face in our daily lives.

Because, regardless of the fluctuations occurring on the international stage, it is often us, the ordinary people, who bear the brunt of the consequences.