Trade-weighted dollar index jumps to 17-year high

  • by Ofeed Team
  • August 20, 2019, 23:52 AM
  • 225 Views
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The trade-weighted broad dollar index is a measure of the value of U. S dollar compared to other currencies. Or it is a weighted trading indicator that improved on the older U.S dollar index using more currencies and updating weights annually.

The weighted dollar of the trade is used to determine the value of the U.S dollar purchasing power as well as to summarize the effects of the appreciation of the dollar and the depreciation of foreign currencies.

When the dollar appreciates, imports to the United States become less expensive, while exports to other countries become more expensive.

A weighted dollar in trade is a measure of the value of foreign exchange to the U.S. dollar compared to certain foreign currencies. Trade dollars give importance or weight to the currencies most commonly used in international trade, rather than comparing the value of the U.S. dollar to all foreign currencies. Because currencies are weighed differently, changes in each currency will have a unique impact on the likely dollar in trade and corresponding indices.

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The trade-weighted dollar reached the highest level since 17 years ago, as it recorded 130.30 points, exceeding 2002 record that was about 129.3 points.

This would not please the United States president Donald Trump as he expressed his worry about the strength of U.S Dollar when he tweeted: “Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to “will” the Economy to be bad for purposes of the 2020 Election. Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world.”

Trump believes the Fed should cut the interest rate by about 1 percent in addition to some quantitative easing in order to stimulate the economy, pointing out that the central bank’s lack a vision for the current conditions.

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