The US dollar hits its strongest level in decades, creating a win-lose situation for global markets

Great to be a greenback… When you exchange US dollars for euros, you’re going to get a lot more bang for your buck — literally. The USD is the strongest it’s been in two decades relative to other currencies. The British pound hit a record low against the USD last week, and as of Friday the dollar was stronger than the euro (which had been more valuable for decades).

• Driving dollar domination: The Fed’s aggressive interest rate hikes have made the USD even more attractive to hold, since investors can earn higher returns.
• The USD's stable rep means it’s historically been viewed as a safe haven, especially during tumultuous times (cough, like now).

Two sided-coin… The USD has long been used as the world's reserve currency for international purchases (~40% percent of transactions are done in $$). That’s why its strength has global implications:

Good for…

• American tourists: Europe is “on sale.” It’s cheaper for Americans to frolic around Rome, London, and Bali. On the flip side, a strong dollar discourages tourism to the US.
• US importers: Foreign imports are "on sale” for American companies (think: cheaper Chardonnay in Kansas). Lower prices on Chinese imports are starting to help cool US inflation. On the flip side: it’s bad for US exporters (pricier Pop-Tarts for Paris).

Bad for…

• Multinationals: S&P 500 companies earned 29% of their sales abroad last year — now foreign earnings are worth less in USD. S&P tech giants earn ~60% of their revenue from abroad (for Apple, it’s nearly two-thirds of sales). Last quarter, IBM , Netflix, J&J, and Philip Morris together lost billions in revenue on the strong dollar.
• The rest of the world: It’s raising the cost of imported food, medicine, and fuel — hitting emerging economies like Nigeria and Somalia especially hard. It’s making debt pricier (since many countries have to pay back IOUs in USDs). Debt-laden Argentina and Egypt are closer to default.