IDEAS home Printed from https://ideas.repec.org/h/spr/advbcp/978-94-6463-916-2_9.html

The Mystery of US Inflation and US Dollar Appreciation

In: Proceedings of the 2025 4th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2025)

Author

Listed:
  • Haotian Jia

    (College of Economics Shenzhen University)

Abstract

In the post-pandemic era, against the backdrop of high inflation in the United States, the U.S. dollar exchange rate did not depreciate as predicted by the purchasing power parity (PPP) theory due to the decline in purchasing power. Instead, it experienced a significant appreciation. This paper reviews the determinants of exchange rates and, combining real-world data, explains the phenomenon of simultaneous decline of USD’s purchasing power and its appreciation against other currencies from 2021 to 2022 through factors such as purchasing power parity, interest rate parity, international capital flows, and macroeconomic policies. The study finds that due to the impact of the pandemic, the supply of U.S. products decreased, while the government implemented expansionary fiscal policies, leading to increased demand, resulting in domestic depreciation. At the same time, the Federal Reserve adopted interest rate hikes to curb inflation, leading to the rise in the U.S. dollar exchange rate. Through the analysis of the U.S. exchange rate, this paper supplements the understanding of how factors influencing exchange rate movements interact in practice.

Suggested Citation

  • Haotian Jia, 2025. "The Mystery of US Inflation and US Dollar Appreciation," Advances in Economics, Business and Management Research, in: Qihui Chen & Nazrul Islam & Zulkiflee bin Mohamed & Yahua Xu (ed.), Proceedings of the 2025 4th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2025), pages 71-78, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-916-2_9
    DOI: 10.2991/978-94-6463-916-2_9
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:advbcp:978-94-6463-916-2_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.