#MarketRebound

How high war costs affect the USD:

National Debt Increases

When war costs are huge, the government borrows a lot of money.

This doesn’t directly reduce USD supply, but it can raise worries about future inflation, which can weaken the dollar.

Higher Interest Rates by the Fed

To manage government debt, the Federal Reserve (Fed) might raise interest rates.

Higher interest rates can slow the economy and reduce liquidity, which may put downward pressure on USD value.

Economic and Political Disruption

High war spending can slow down economic growth.

Domestic investment may drop, exports and imports may be disrupted, which can indirectly weaken the USD.