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September 22, 2007
Dollar, Dollar, Toil and Trouble
Lots of currency stories in the weekend papers, which must mark some sort of near-term trough for the tumbling U.S. currency. Nevertheless, this figure from the NY Times is interesting, showing that the dollar is, in trade-weighted terms, touching its lows of the floating era:
Particularly interesting, and proving the utility of the trade-weighted measure, is that even when the dollar was doing dizzyingly well in the late 1990s it wasn't all that close to its all-time highs.
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As mentioned in that article, the chinese yuan isn't included, since dollar doesn't freely float against it.
This might explain your observation about the apparent lack of relative late-90's strength -- I don't think we did as much relative trading with china in the mid-80s as recently (if I'm wrong, please correct me). So although the dollar is clearly weak, gotta be careful at comparing it do data too far back in the graph.
Still, interesting data, thanks!