Sunday, February 07, 2010

Weak Dollar Illusory as Correlated Trade Shows Gains Since 1975

Bloomberg reports:
For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago.

Measured against a basket of currencies from the Group of 10 nations proportioned by how they trade against each other, the greenback is up about 3 percent since 1975, according to Bloomberg Correlation-Weighted Currency Indexes. That was four years after the Bretton Woods agreement set up in 1944 to link currencies to the price of gold collapsed. The U.K. pound has dropped 34 percent and the Canadian dollar has fallen 6 percent.