Most scenarios for the dollar involve crises, shocks, and weakening. But there is an opposite possibility: if the AI boom is not a bubble but actually boosts the productivity of the American economy, the dollar will face a capital inflow that will strengthen it more than any crisis in Europe or China.

History shows that the currencies of countries undergoing technological revolutions strengthen for years. If the United States becomes the primary beneficiary of the AI revolution, the dollar could enter a new era of dominance. Let’s examine how this could happen and what it would mean.

Why productivity matters more than rates

In the long run, a currency strengthens not because of rates or geopolitics, but because of productivity. The more efficient an economy, the more goods and services it produces per unit of cost, the higher the real return on investment, and the more attractive its assets become to global capital.

The United States has experienced several waves of technological leadership, each of which strengthened the dollar. In the 1990s, the internet revolution and productivity gains in IT led to a 30% appreciation of the dollar against the yen and the German mark. In the 2010s, leadership in cloud computing and smartphones supported the American currency despite economic weakness at other times.

If AI truly boosts productivity, the effect could be even larger. Artificial intelligence promises to automate a significant portion of intellectual labor—from programming to legal services, from medicine to finance. If these promises are realized even partially, the American economy could enter a period of sustained productivity growth that would support the dollar for decades.

What will happen if AI meets expectations

The first effect is an increase in the real returns on American assets. If companies become more efficient, their profits rise and investors are willing to pay more for their shares. Foreign capital will flow into the United States, creating demand for dollars.

The second effect is the strengthening of the dollar against the currencies of countries that lag in AI. Europe, Japan, and China invest in AI, but their companies and regulatory environments are less dynamic. If the United States maintains its leadership, its currency will strengthen against competitors’ currencies.

""" The third effect is a decline in inflation. As productivity increases, companies can produce more at the same cost, which reduces pressure on prices. This will allow the Fed to maintain lower interest rates without the risk of inflation, thereby supporting the dollar through growth in the real economy.

Why this scenario is underestimated

Most analysts focus on risks: an AI bubble, geopolitics, debt, and de-dollarization. However, few consider a positive scenario in which AI actually transforms the economy. This creates an asymmetry: the market may underestimate the dollar’s potential if this scenario materializes.

History shows that technological revolutions rarely end in nothing. The internet bubble of 2000 burst, but the internet changed the economy forever. If AI follows the same trajectory, a short-term correction will not negate the long-term effect.

Furthermore, the United States has unique advantages in AI: the largest companies, the best universities, access access to capital, and a culture of entrepreneurship. These advantages will not disappear in a few years, and they will continue to support the American economy and currency.

Who will gain and who will lose

The main beneficiaries will be the dollar, American stocks, and companies that implement AI first. Investors holding American assets will receive a double benefit: an increase in asset value and a strengthening of the currency.

The most vulnerable will be countries that cannot compete in AI—their currencies will weaken against the dollar. Europe, Japan, and China may face capital outflows to the United States, which will weaken their currencies and slow their growth.

For the dollar, the final effect will be unequivocally positive. Unlike crisis scenarios, this scenario does not require a catastrophe for competitors—it only requires success for the United States. And this makes it more likely than it seems.

What does this mean for the dollar

If AI lives up to expectations, the dollar may enter a new era of dominance. Its exchange rate will strengthen, its share in world reserves will stabilize, and capital inflows to the United States will increase. This will not negate the long-term trends of de-dollarization, but will slow them down and give the dollar a new foundation.

However, this scenario is not guaranteed. AI may turn out to be a bubble, productivity may not increase, and investors may lose money. But if it materializes, the consequences for the currency market will be as significant as in the case of any crisis—only with the opposite sign. """

""" For investors, this means keeping a close eye on productivity data, not just interest rates and geopolitics. AI could become a new driver of the currency market, replacing old models based on interest rate differentials and capital flows. """