Question

A. Explain what has happened to the value of Dollar over the past 5 years.

In relation to the currency in China, to the Euro, to the currency in India, and the Canadian dollar.

B. Analyze results in Part A. Why do you think it went or down in value versus different currencies?

Answer 1

1. The value of dollars has appreciated in respect to the currency of China and the currency of India as well as the Canadian Dollar but it has depreciated in respect to the European dollars.

Chinese economy is facing a industrial meltdown since 2015 onwards and the value of Chinese currency has gone down in respect to the American Dollars and Indian economy is also not providing any recovery so it is also depreciating in respect to the overall American Dollars where as the European economy has relative strengthened after the great recession and it has maintained its strengtuian after the oust of Britain from European union. Even the Canadian economy has recovered but it has not substantially beaten the rate of return of dollars.

2 .I think it over all went up in relation to a basket of currencies, because of the outperformance of the American economy in respect to the other world and there has been a proactiveness on the part of the Federal Reserve to maintain the quality in the economy and maintain a better strength in the dollar even after cutting the interest rate so it can be said that the dollar has relatively maintained its strengths against other currencies.

this can also be attributed to a large amount of foreign reserve which has been kept in Dollars and dollar being the major currency of the entire commercial exchange world so it is having a leverage against all the other currencies.