US DOLLAR HISTORY SINCE 1980 - AND HOW IT AFFECTS GDP.
Original post as follows:
This graph (courtesy of FRED at the St. Louis Fed) is indexed in the same way as the NYBOT index below. You can see pretty much how the US dollar has performed over the years. A few notes:
- You can see the result of the Plaza Accord very clearly here - the meeting in 1985 between 5 nations (including the US) to devalue the dollar.
- The Early 1980s Recession was accompanied by a rather large jump in the value of the US Dollar. This was the result of Paul Volcker's contractionary monetary policy. Volcker's high interest rates caused a large international investment in the US Dollar, giving massive confidence in the strength of the currency.
- You can also see that, historically, the US Dollar is cheaper than ever. The reason for the graph not going back before 1973 is because, before that, the dollar was fixed in price as per Bretton Woods (and the Gold Standard).
- The interest rate increases in the last three years initiated by the Fed did not result in an increase in the value of the US Dollar over the long term.