'Our currency, your problem': The dollar's surge to 20-year highs is causing headaches around the world, a Goldman FX chief says

The US dollar has appreciated rapidly this year, pushing countries into a reverse currency war to keep up.

The reasons for the dollar's rise on the Exchanges was explained by Kamakshya Trivedi, head of global foreign-exchange research.

Trivedi said the US currency's strength was due to the Fed's rate hikes. He said that a resilient domestic economy allowed the central bank to tighten its monetary policy after it raised inflation to a 40-year high in June.

Here are Trivedi's 6 best quotes, lightly edited for length and clarity:

This is the first thing. The Federal Reserve is hiking rates in a big way. They are moving quickly and seem to be less constrained than other central banks. The dollar is supported against most currencies.

There are two A stronger dollar is a problem for a lot of the other parts of the world.

There are three. Many countries have a dilemma. They can either accept a faster depreciation of the currency. If they want to keep pace with the Fed, they need to move rates up fast enough. In a lot of economies, there is a trade-off between how much you can tighten and how much you don't.

There are four. The dollar can appreciate even further. Our forecasts for the next few months have 2% of dollar appreciation baked into them. If US inflation is more entrenched and the Fed needs to move further and keep rates higher, you could see another 5% to 7% appreciation.

There are five. There is a debt crisis in some of the more vulnerable pockets of emerging markets. The real debt problems that are beginning to take place are in that area. He pointed to several countries as examples.

There are six. "For the dollar boom to end, you need to see convincing evidence that inflation is peaking, because that will allow the Fed to pivot back towards smaller steps, and eventually to pause this hiking cycle." Currency are a game. You need to be aware of better news in other places. The UK and Europe need to start showing signs of economic recovery in order for the dollar to weaken.

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