In the short term, or even say upto a year or so, the direction is not as important imo, given that currency markets are very volatile, but when you see a 5 year trend (how long has George been in charge?) then it is hard to argue with the market.
Sorry I was not clear enough about the index. I meant the trade weighted dollar index. It is calculated relative and in proportions to our trading partners' currencies. I couldn't find a good online source for it. But if I had, I suspect you'd see a more horrifying picture. Consider for example how much the USD has fallen against Oil or Gold in addition to CAD (most indecies may not calculate it exactly that way, but I would have). I supose stability against Mexico and China (RMB) could have countered some of the effects of oil and gold, but...
In any event, this is how I look at it. Say your assets are worth 1,000,000USD. Without looking up the details, 5 years ago that would have meant you could move to Canada and buy 1,600,000CAD assets (homes, lumber, business, stock shares...) today your assets get you only 1.18M CAD That is a big loss. 5-years ago you had equivalent of 40,000 barrels of oil, today you have about 15,000 barels of oil. 5-years ago you could go for vacation in Europe or buy a villa in south of France, today, not really...in fact, USD has even fallen against Indian Rupee! And that says a lot!
In short, in a very real sense, all of us are a lot poorer in the global stage than we were 5 years ago.
[edit: A footnote about the trade weighted USD index, if you find it online. Most would only look at relative performance of the USD versus the currency of the trading country. This can make USD look more stable than it really is. For example, Saudi Rial (SAR) is fixed at about $3 (I think). So the index would not show USD falling against SAR. But the fact is that we used to give them a lot less dollar for a barel of oil. In other words, just because SAR is fixed against USD, it does not mean we cannot measure the fall of USD relative Saudi's "real" currency, i.e. oil] |
