Category Archives: the dollar

Fifty Years of Floating

Share Button

March 26, 2023 —  This month marks the 50th anniversary of the date, in March 1973, when the dollar, yen, deutschemark, pound, and other major currencies went untethered, their relative values to be determined thenceforth by foreign exchange markets rather than by governments.  The abandonment of the Bretton Woods system of fixed exchange rates was generally viewed as a policy failure. The movement from fixed to flexible exchange rates, however, was better viewed as part of a natural long-term process. read more

Share Button

The Dollar Dazzles Once More

Share Button

September 24, 2022 — The dollar is sky-high.  Since May 2021, it has risen 19 % against Europe’s euro, even reaching 1-to-1 parity in recent weeks. The dollar has appreciated 20 % against Britain’s pound.  And it is up 28 % against Japan’s yen, provoking the Bank of Japan to sell dollars on September 22, essentially the first foreign exchange intervention by a G-7 country since 2011 and the first in the direction of supporting a currency’s value against the dollar since the euro in 2000. read more

Share Button

Get Ready for “Reverse Currency Wars”

Share Button

May 28, 2022  — The US dollar is up 12 % against the euro over the last year.  Having moved from 1.21 $/€ in May 2021 to 1.07 $/€ today, the exchange rate seems to be approaching one-to-one parity for the first time.  Europeans are not happy about it. If you think that prices for oil and other commodities are high now in terms of dollars, you should see what they look like in terms of euros.  Get ready for “reverse currency wars.”

The regular sort of currency wars featured countries feeling aggrieved that their trading partners were deliberately pursuing policies to weaken their own currencies.  The feared motive would be gaining unfair advantage in international trade.  The original phrase “currency wars” was a colorful description of what international economists had (more informatively) long called “competitive devaluations” or, when exchange rates float, “competitive depreciation.” read more

Share Button