Investments have become a conversation starter these days, and this generation’s investors have an insatiable appetite for U.S. dollars. Wondering why?
The USD hit a 20-year high in 2022. Americans believe Europe offers the best value for money now than it had in 20 years and have started traveling across Europe. Bonjour France! Over time, the constant strengthening of the greenback has made it undeniably the best currency to invest in for many.
But really, how ‘brawny’ is the U.S. dollar?
1 USD = 81.38 INR
1 USD = 1.48 AUD
1 USD = 139.81 JPY
1 USD = 7.08 CNY
1 USD = 17.30 ZAR
That’s impressive! Withal, the USD and EURO hit parity after two decades with an exchange rate of 1:1 in 2022. The U.S. dollar has always been valued higher than most robust global currencies.
Here are 5 factors that underpin the dollar’s dominance, making it the ideal currency for investments:
Robust U.S. Economy
The performance of the U.S. economy is at the heart of buying or selling dollars. The U.S. economy, year on year, has been one of the best-performing economies in the world. Its strong economy has been attracting foreign capital and therefore driving the demand for currencies.
Also, with its economic influence, the United States has had a significant impact on other world countries. As a result, the U.S. dollar has become the benchmark currency.
Safe Haven During Currency Fluctuations
Three currencies are considered safe havens for investment: the U.S. dollar (USD), the Japanese yen (JPY), and the Swiss franc (CHF). Compared to currencies of other major economies, the U.S. dollar has been the default global safe haven forever and a day. Investors worldwide have plunged into investing in the U.S. dollar predominantly because of the security it assures.
The constant demand for it ultimately puts pressure on the dollar supply, thereby increasing its value. The hiked dollar value ultimately creates wealth.
Federal Reserve Rates Strengthen The Dollar
The Federal Reserve’s decision can have a make-or-break impact on dollar value. The U.S. Federal Reserve is responsible for managing monetary policy and regulating the financial system. How does this institution make the dollar an attractive source of investment?
The Fed raised interest rates in November to a range of 3.75% to 4% from virtually zero at the beginning of 2022, contributing to the strengthening of the currency. The increase regulates inflation and ensures the purchasing power stability of the dollar.
What Does The Strong Dollar Mean In Real Estate?
The strong dollar has fuelled a surge in U.S. real estate investment. The dollar value significantly impacts real estate: the higher the value, the better the market.
Here are 5 indisputable reasons why investing in American real estate is a smart move:
- Profit From Dollar Appreciation: The USD being the most dominant currency, real estate value in the United States appreciates over time. The prices of houses grew in all 50 states of the United States, making it the ideal place for real estate investments for foreign investors. Property appreciation directly translates to profits.
- Favorable Debt Terms: The 1031 exchange for tax deductions allows for a reinvestment with deferred taxes as long as the property sold and the property bought are ‘like-kind’—this aids in adjourning the capital gains and depreciation recapture taxes.
- Diversification Potential: U.S. real estate has received relatively more attention than other primary investment assets mainly because of the value it offers. Real estate is a ‘bull market’ and has been leveraging dollar strength to shift the investment mindset and make investment portfolios look diversified.
- Stability And Security For Foreign Investors: The U.S. is the most stable country in terms of real estate investment. The stability it assures and the remarkable returns have been foreign investors worldwide. The U.S. housing market has appreciated by 4.4% annually since 1991! The U.S. is an excellent place to invest money, especially with the real estate value projected to rise in 2023.
- ‘Risk-free’ Compared To Stocks: The stock market is highly volatile, no doubt. One cannot base future returns on historical returns. U.S. real estate has lower risks and higher safety compared to stocks. The tangible value and the asset it creates can be trusted in the long run.
WATCH: Why you should invest in dollar-bound assets?
To cut a long story short, U.S. real estate can create wealth like no other. It is also among the world’s top mines for passive income investments.
Real estate in the United States is Resilient, Radiant, and Rewarding.
Ashton Gray Development is a vertically integrated real estate investment and development company that has created a competitive advantage that yields higher returns for its investors. With its proven 100% return on capital track record, Ashton Gray is a leader private equity real estate arena.
Do you find investing in American real estate to be overwhelming? Reach out to us, and we will simplify it for you!