CPA Urges Fed, Treasury, Congress to Address Soaring U.S. Dollar

Currency misalignment reaching critical level

WASHINGTON — The Coalition for a Prosperous America (CPA) today formally urged the federal government to address the U.S. dollar’s continuing overvaluation. In a letter to U.S. Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and the leadership of the Senate Banking and House Financial Services Committees, CPA highlighted the magnitude of the unfolding currency problem.

“The dollar’s steady rise is reaching a crisis level,” said CPA Chair Zach Mottl. “This is not an academic issue. The damage that a heavily overvalued dollar causes for U.S. manufacturers and their workers—as well as the stresses it imposes in emerging markets and developing nations—presents serious risks to the global economy. My own manufacturing company in Illinois is experiencing this firsthand. A significantly overvalued dollar has made our products less competitive at home and abroad, putting our sales, hiring, and investment now at risk—particularly as the U.S. economy teeters toward a downturn.”

CPA’s letter documents how much of the dollar’s overvaluation is being driven by a flood of foreign private investment seeking “safe harbor” in U.S. financial markets. This drives up demand for the dollar, making U.S. exports more expensive overseas and imports artificially cheap in the U.S. market.

The dollar’s rise in the first nine months of this year has been extraordinary—boosting the dollar far above other currencies. In 2022 alone, the dollar has risen:

  • 15.7% against the euro, 
  • 21.3% against the pound sterling
  • 25.6% against the Japanese yen

Against a broad basket of currencies, the dollar has risen by 10.7%. 

Such large increases come on top of the dollar’s already significant rise over the past few years. CPA’s Economics Team estimates that, prior to 2022, the dollar was overvalued by 17%. As a result, recent events have now propelled the dollar to a disturbing 30% overvaluation.

Currency overvaluation is a prime driver of America’s growing trade deficits, including a record $1.09 trillion international goods trade deficit in 2021. U.S. manufacturers are already struggling, but the consequences for the global economy are equally serious. Smaller nations in Asia, Africa, and Latin America face the challenge of paying for dollar-denominated imports with their own weaker currencies. And Europe bears the burden of triple-digit percentage increases in the cost of dollar-denominated oil and gas imports.

CPA is urging the Biden administration to lead a group of trading partners in a coordinated currency intervention program similar to the Plaza Accord negotiated by the Reagan administration in 1985. In the long term, CPA suggests Congress pursue a Market Access Charge (MAC) overseen by the Fed to impose a small, variable fee on incoming foreign investment.

“The global economy faces a major test as a result of the dollar’s overvaluation,” said Michael Stumo, CEO of CPA. “The impact of the dollar’s rise has moved beyond simply hurting America’s manufacturers and workers. Washington urgently needs to consider capital flow and exchange rate management to address both the deterioration of America’s global competitiveness and the detrimental impacts on other nations. A second Plaza Accord and a variable charge on capital inflows can help stabilize both the U.S. and global economy now and in the future.”

Read CPA’s full letter to Yellen, Powell, and Congress.


CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.

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