The Value Of A US Dollar Exchange Rate History Chart
The exchange rate of the U.S. Dollar, as seen on a US Dollar exchange rate history chart, expresses the dollar’s performance relative to the currency with which it has been paired for a specific comparison. How the U.S. Dollar has fared against the British Pound, for example, may not indicate its performance against the Swiss Franc or Japanese Yen.
Being the most active international currency traded anywhere, the United States Dollar (UDS), or Greenback, is a part of every popular currency trade made. As the base currency in some trades, such as when paired with the Japanese Yen (USD/JPY) or as the quote currency in others such as when paired with the Euro Dollar (EUR/USD), it figures into about 90 percent of all FOREX trades.
Back in July, 1944, at the height of the Second World War, 730 representatives from all the 44 Allied nations met at a hotel in New Hampshire for the United Nations Monetary and Financial Conference. Obviously, delegates from Germany and Japan were not in attendance, since those countries were not part of the Allied group. It was during this conference that the IMF (International Monetary Fund) was created and a system which became known as the Bretton Woods System was put into operation.
A US Dollar exchange rate history chart looking at that time would indicate that the dollar was strong compared to other world currencies. The War, however, was taking its toll on all the involved countries’ financial positions. It was agreed then and there to institute strict monetary policies requiring all member nations to adopt safeguards to rein the exchange rates of their currencies to within certain limits and to peg all currencies to the value of gold.
This all changed, however, when in 1971, the U.S. unilaterally went off the gold standard by canceling the convertibility of dollars directly into gold. No longer requiring its currency to be backed by gold, the U.S. was free to print as much money as it liked. Many experts see this event as the cause of the financial meltdown suffered in the world beginning in 2007.
This action consequently caused world currencies to ‘float’, with their values figured on a new, speculative basis rather than being backed by something tangible like gold. Currency exchange rates now change constantly, often buffeted about by political news and market sentiment. Speculators now rule the financial markets.
Most all FOREX trades involve the USD as one in the pair being traded. It is usually traded against the other major currencies such as the British Pound, Swiss Franc, Euro Dollar, Canadian Dollar and Australian dollar. Any US Dollar exchange rate history chart would have to take into account all of these major currencies to provide a true reflection of the dollar’s real value.
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