The U.S. dollar has surged to its highest levels in at least two years against other major currencies. But when you factor in our current inflation situation – is this good news for Americans?
- Plus: our immunity against this summer’s strain of COVID-19.
- And: President Biden heads to the Middle East.
Guests: Axios' Javier David and Tina Reed.
Credits: Axios Today is produced by Niala Boodhoo, Sara Kehaulani Goo, Alexandra Botti, Nuria Marquez Martinez, Lydia McMullen-Laird, Alex Sugiura, and Ben O'Brien. Music is composed by Evan Viola. You can reach us at [email protected]. You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.
Go Deeper:
- The dollar’s "remarkable" double-edged sword
- The summer of subvariants
- At least 14 killed in mass shooting in South Africa
- Scoop: Biden to announce $100 million for Palestinian hospitals on Middle East trip
- Protesters storm Sri Lanka’s presidential palace, set prime minister’s home ablaze
Transcript
NIALA: Good morning! Welcome to Axios Today! It’s Monday July 11th. I’m Niala Boodhoo. Here’s what you need to know today: our immunity against this summer’s strain of COVID-19. Plus, President Biden heads to the Middle East. But first, the double edged sword of a strong U.S. dollar is today’s One Big Thing.
NIALA: The US dollar has surged its highest levels in at least two years against other major currencies. But when you factor in our current inflation situation, is this good news for Americans? Axios’ managing editor for business Javier David joins us now to answer that question. Hi Javier.
JAVIER DAVID: Good day. How are you?
NIALA: Let's first talk about this concept of the dollar as a safe haven currency. Can you explain what that means and how we're seeing that increase the current strength of the US dollar?
JAVIER: The basic concept to keep in mind is the dollar is the premier global reserve currency. And that carries some weight. It means that when times get rough in global markets, the dollar is the go-to for sort of investors seeking safe haven from all of these squalls that are buffeting global markets. And right now we're talking about the Russia- Ukraine conflict, we're talking about inflation, we're talking about an environment of higher interest rates. Um, and there are sort of little fires everywhere if you look out across the global landscape. So in times like this and where there's a lot of turmoil investors kind of don't know where to turn, the dollar is one asset, primarily because of the treasury market, which is very deep and very liquid and right now is kind of like seeing a surge in yields, that makes it attractive for investors who are kind of like basically looking for both safety and a little bit of a higher return on their assets.
NIALA: And when we're thinking about the other currencies, the euros at a 20-year low, almost equal to the dollar. It was very nice to be shopping in London, I will tell you a few weeks ago with the exchange rate, which was similarly low for the pound. But how does this affect people? Like I'm thinking of farmers and America who export their goods.
JAVIER: Yeah. So it's a double edged sword, so it's a great time to a be traveling in or other global destinations, in an environment where the dollar is strong and it's also good because as US consumers, we really like to shop and we particularly like shopping abroad. So we import a lot of stuff. So it's actually on some level a counterweight to the inflation effect that we've been seeing. So when you we’re buying things from abroad, it's cheaper for us. Now, the converse of that is companies that are based in other places will when they try and bring those results or those revenues home, they're going to see a negative effect on the balance sheet. Also, exporters, as you mentioned, people that are trying to sell their goods in other markets, are also going to have a little bit of a negative time because you know, in an environment where the dollar is strengthening or the dollar is weakening, you know, you want to be able to,sell your goods, at, a more competitive rate.
NIALA: So what are we thinking about the foreign exchange rate in foreign currency markets as we think about the summer months, and we look at the current inflationary situation in the US. Do we continue to think that the dollar will be pretty strong relative to other currencies?
JAVIER: Well, there's no real end in sight. And a big part of that is because the Federal Reserve is still perceived as very hawkish against inflation. They will continue to raise rates that is bullish for the dollar, um, that is bullish for interest rates. And that's bullish for some of these investors that are trying to find, um, higher returns. So the dollar is the highest yielding currency at this particular juncture in time, so we don't really, uh, see any end in sight for this strength.
NIALA: Javier David is Axios’ managing editor for business. Thanks, Javier.
JAVIER: Thank you.
NIALA: In a moment we’re back with what you need to know about the latest strain of COVID-19.
NIALA: Welcome back to Axios Today! I'm Niala Boodhoo. BA.5 is the most transmissible subvariant of COVID-19 yet and now the dominant version of the virus circulating in the US and much of the world. Studies have shown this strain is three to four times more resistant to antibodies, meaning yes, you can get infected again. Here with the story is Axios healthcare editor, Tina Reed. Hi, Tina.
TINA REED: Hi Niala.
NIALA: Tina, so a lot of people who've gotten COVID recently think that gives you immunity against getting it again. But is that really true when it comes to this variant?
TINA: So, what we know is that it is now the dominant strain in the US, but we don't necessarily know how many people are getting reinfected, that's more anecdotal. As I spoke to some public health experts, they said that really, they're hearing about a lot of reinfections. What I was told is that those folks who got the earliest strain of omicron back in December or January probably don't have much protection against BA.5. Those who maybe got infected a little bit more recently, again they're not sure, but may have a little bit more protection.
NIALA: Given how transmissible BA.5 is, what are we seeing about infection rates? And most importantly, the death rate in the US?
TINA: So, what we know right now is the infection rates are on the rise. A lot of tests right now are home tests. So whatever sort of estimates we have in the US probably are much lower than what the actual numbers are. One thing that we are watching closely is what's happening with hospitalizations. The hospitalizations are still far, far lower than they were at the height of omicron back in January. But they are on the rise again and we're not sure yet if that means that it's a rise in COVID hospitalizations or if it's a rise in hospitalizations of people who happen to have COVID. And that's still being followed. We've seen overseas in some places, hospitalizations haven't changed at all with BA.5 and other places they have risen. So the death rate is still fairly low, and has even decreased, recently. So what I would say is it's holding study, during the current surge.
NIALA: The CDC so far only recommended a second booster shot for people who are over age 50 or who are immunocompromised. What should those of us who don't fit into that category be thinking about getting a second booster shot?
TINA: So the FDA recently gave the green light to companies to really start testing omicron-specific booster shots. And, there are a number of shots that are being created right now. So I think people should be prepared that that's going to be the recommendation in the fall at some point, that we will be seeing boosters for the broader population of adults 18 and up.
NIALA: What are epidemiologists telling you about the rest of the summer then?
TINA: Epidemiologists are saying that unfortunately, you know, your vaccination and your previous bout with COVID might not be enough to keep you from getting sick from COVID. So if you really want to avoid getting sick, um, perhaps your immunocompromised or you really need to travel and, and you don't wanna get sick, you really should be taking precautions again. Um, masking social distancing, things like that. And I think a lot of people wanna move on from the COVID virus. And unfortunately they're saying we can't do that yet.
NIALA: Axios Tina Reed, our healthcare editor. Thanks Tina.
TINA: Thanks Niala.
NIALA: Before we go - we wanted to catch you up on three headlines from around the world this weekend: The Sri Lankan president and prime minister have both agreed to resign after intense protests in the capital city of Colombo Saturday. Thousands of protesters stormed the presidential palace and set fire to the prime minister’s private home. The country is facing its worst economic crisis in decades leaving many without access to food, fuel or medicine. 19 people are dead in South Africa after two apparently random weekend shootings at bars in two separate cities. South Africa has a population of about 60 million people and according to the campaign group Gun Free South Africa about 23 people are murdered with guns every day, making it one of the highest per capita murder rates in the world. President Biden heads to the Middle East this week for his first international trip as president to the region, where he’ll be visiting Israel and the West Bank along with Saudi Arabia. Axios’ Barak Ravid reports exclusively that the President plans to announce $100 million in aid to Palestinian hospitals in East Jerusalem during the trip. We’ll have more details on Biden’s trip later this week.
That’s it for us today! You can always send us feedback by emailing podcasts you can text me at (202) 918-4893 or you can message me on twitter.
I’m Niala Boodhoo - thanks for listening - stay safe and we’ll see you back here tomorrow morning.