The U.S. dollar has been getting stronger relative to other currencies recently. The dollar has risen steadily for over 11 weeks and that’s the longest winning streak for the dollar since our currency became free-floating in 1973.

As of Monday, the U.S. Dollar Index DXY, +0.40% stood at a four-year high.

The dollar index measures our dollar against a basket of six major currencies, the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and the Swiss franc.

Our currency has been bolstered by a strengthening economy. The latest estimate of the gross domestic product (GDP) was released on Sept. 26 and it showed the economy growing at a 4.6% annualized rate. No one knows when the fed will start raising interest rates, but when they do, higher interest rates should benefit the dollar as well.

The almighty dollar is at a record high compared with the Russian ruble, close to a six-year record compared with the Japanese yen and the Brazilian real and almost at a two-year record high versus the euro. One positive impact for retirees will be on your vacation budget. If you've been dreaming about taking a vacation to one of those places, you'll get the most favorable exchange rate available in years. If you've ever had a desire to visit Russia, now might be the time provided you're willing to assume the political risk.

The rising dollar can affect your wallet in other ways even if a foreign vacation isn't in your plans. The strong dollar affects the price of crude oil, and consumers see that at the gas pump. As of Tuesday, AAA pegged the national average price for a gallon of unleaded gasoline at $3.28. The price has been dropping and many forecasters see it trending even lower throughout the remainder of the year. Saving a few bucks at the gas pump frees up funds to spend elsewhere. In a year, a fifty-cent decline in the price of gas per gallon will put an additional $50 billion a year into consumers' pockets. It's like a huge cut in taxes.

As Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. noted in a report last month, "In general, a stronger dollar is likely to be both an economic and a market positive." Historically stocks have performed better in dollar bull markets than in periods of dollar decline. We could see a boom in global M&A, merger-and-acquisition activity as U.S. corporations look to invest cash overseas and take advantage of the strength in the dollar versus other global currencies.

There are sectors of the market that have historically performed better than others when the dollar index is rising. Some of the best sectors have been telecom and information technology while energy and materials have been among the worst.

The Chinese could be a winner, too, because they hold huge amounts of U.S. dollars in reserve. China has almost $4 trillion in foreign reserves, most of which are U.S. dollars.

Even though a strong dollar definitely has some advantages, there are some disadvantages as well that investors should be aware of. A strong dollar can be bad for corporate profits, especially for exporters as their goods get more expensive in foreign markets. It also can make their products relatively more expensive here in the U.S. compared with imports. Big multinational corporations that earn a lot of their income overseas can also feel some pain as the money generated overseas is worth less in dollar terms. It also makes it harder for foreign investors to purchase U.S. stocks, but does make it easier for U.S. investors to buy foreign equities.

Please remember that past performance is no guarantee of future results and to consult your financial adviser before making any investment decisions.

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