Question

How would you explain the dollar’s strength prior to 1985? What economic fundamentals appear to have been at work? What risks and opportunities did this strength present to U.S. business interests?

Answer 1

Dollar strength prior to 1985:

The bull market was presented in the economy for six years and in that case, it was there in the economy for 1979-1985 where the pricing was kept on rising and the government is dealing with the inflation. Under that particular situation, the capital is attracted to the economy to a large extent.

The reason behind this is the rising interest rates of the U.S Reserve. The opportunities that the company is dealing with the investment from outside because of that. The economy is rising in that sense but inflation is another major threat to the economy.