Magazine article Economic Trends

International Markets

Magazine article Economic Trends

International Markets

Article excerpt

The Broad Dollar Index includes the currencies of 26 countries or regions that had a share of at least 0.5% in U.S. non-oil imports or nonagricultural exports in 1997. The Major Currency Index includes the currencies of countries or regions that are traded in liquid financial markets and for which there are both short- and long-term interest rates. Since the beginning of the year, these indexes have behaved alike. After depreciating since the year began, both of them appreciated significantly during a short period that included the starting date of the war in Iraq. From soon after the war's start until now, both have depreciated after experiencing a run-up around the beginning of April.

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The countries or regions included in the Major Currency Index are Australia, Canada, the euro region, Japan, Sweden, Switzerland, and the U.K. With the exception of the British pound and the Japanese yen, the currencies in this index all have appreciated against the U.S. dollar since the beginning of the year. Since the Iraqi war started, the Australian dollar, the Canadian dollar, the Swedish krona, and the Swiss franc have appreciated against the U.S. dollar. Although the British and Swiss exchange rates have shown considerable movement, the U.S. dollar's value against these currencies is about the same as it was at the start of hostilities. Since then, the U.S. dollar has strengthened against the Japanese yen.

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Both the short- and long-term U. …

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