Investors have every reason to hate the U.S. dollar. The rising deficit. The deteriorating economy. The plunging stock and bond markets. But rather than getting hammered by the financial crisis, the greenback is soaring. Since July the dollar is up 19% against the euro and 24% against the British pound. U.S. consumers traveling to Paris will find their cash buys more than before.
What's behind the dollar's surprising strength There's the fear factor. During tough economic times, investors often flee foreign currencies and other risky assets for safe havens like the U.S. dollar. The demand drives up the price relative to other currencies. In four of the past five recessions since the 1970s, the greenback finished the downturn higher than where it started.