Bank of America believes that artificial intelligence is emerging as a new force shaping the market value of the US dollar. In the short term, its impact may be mixed. Yet the investment boom driven by AI adoption has already added substantial momentum to the American economy and become a supportive factor for the US currency.
According to the bank’s estimates, in the first two quarters of 2025, investments in AI infrastructure—software, hardware, and data centers—contributed between 1.2 and 1.3 percentage points to US GDP growth. This boom has coincided with the rise in high-tech stocks, stronger consumer activity, and persistent inflation in the services sector. Together, these elements have reinforced expectations of higher interest rates from the Federal Reserve, commonly bullish for the dollar.
Still, a direct correlation between the rally in AI-related stocks and a stronger dollar has not materialized yet. Despite volatility in stock markets earlier this year, the dollar has largely traded sideways. Bank of America’s analysts emphasize that macroeconomic factors—such as interest rates and inflation expectations—remain the key drivers of currency performance.
There are, however, notable risks. The most significant one is AI’s impact on the labor market. Companies are becoming more cautious in hiring for jobs that could be automated. The early signs of cautious hiring may eventually translate into higher unemployment, potentially prompting the Fed to ease monetary policy. Therefore, the US dollar could lose ground amid a series of rate cuts.
In the longer term, much will depend on whether AI leads to higher productivity or instead exerts disinflationary pressure. In the first case, the dollar could benefit, as it did in the late 1990s during the technological transformation of the US economy. In the second, weaker inflation might reduce returns on US assets and, in turn, dampen global demand for the greenback.
Despite the uncertainties, Bank of America reckons that today’s AI investment wave—unlike the dot-com bubble—rests on profitable, fundamentally sound companies. This high investor interest in AI is more constructive for the dollar.
For now, AI has not become a dominant force in currency markets. Once investors see tangible long-term returns and productivity gains, artificial intelligence could evolve into one of the structural pillars supporting the US dollar in the years ahead.
