Dollar Currency
The value of the dollar appears to move in one direction for long periods of time. We develop a new statistical model of exchange rate dynamics as a sequence of stochastic, segmented time trends. Determining the relative value of an amount of money in one year compared to another is more complicated than it seems at first. There is no single measure and economic historians use one or more different indicators depending on the context of question. The CPI is most often used to make comparisons partly because it is the series with which people are most familiar. This series tries to compare the cost of things the average household buys such as food, housing, transportation, medical services. It can be interpreted as how much money you would need today to buy an item in the year in question if its price had changed the same percentage as the average price change. Furthermore, consumer bundle implies average dollar value of the annual expenditures of consumer unit as the main point is that spending is a joint decision of the members of the unit and not like the CPI, it just not about the cost but as well as the amount of goods and services increases over time as last 2006 of the value.
Citation of Data: The dollar is then being used as the standard unit of currency in international markets for commodities such as gold and petroleum and that even foreign companies with little direct presence in US, like European Airbus firm, as the listings and the selling of the products were in dollars, as several has argued that this can be attributed to aerospace market dominated by American companies. The present epoch, the U.S. dollar remains the world’s foremost reserve currency as mainly held in 0 denominations. The majority of U.S. notes are held outside the US that is regardless of the location as there be overseas demand for dollars that allow the country to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust. Thus, value of the dollar is one of imperative global reserve currency and then followed by the euro as euro inherited this status from the German mark and had increased its standing at the expense of the dollar. Despite the dollar’s recent losses to the euro, it is still by far the major global eserve currency having the accumulation as three times compared to the euro currency.
International accumulation of foreign reserve currencies
Currency
Percentage of global currency reserves held in the particular currency, expressed in US dollars
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
US dollar
59.0%
62.1%
65.2%
69.3%
70.9%
70.5%
70.7%
66.5%
65.8%
65.9%
66.4%
65.7%
Euro
-
-
-
-
17.9%
18.8%
19.8%
24.2%
25.3%
24.9%
24.3%
25.2%
German Mark
15.8%
14.7%
14.5%
13.8%
-
-
-
-
-
-
-
-
Pound sterling
2.1%
2.7%
2.6%
2.7%
2.9%
2.8%
2.7%
2.9%
2.6%
3.3%
3.6%
4.2%
Japanese yen
6.8%
6.7%
5.8%
6.2%
6.4%
6.3%
5.2%
4.5%
4.1%
3.9%
3.7%
3.2%
French franc
2.4%
1.8%
1.4%
1.6%
-
-
-
-
-
-
-
-
Swiss franc
0.3%
0.2%
0.4%
0.3%
0.2%
0.3%
0.3%
0.4%
0.2%
0.2%
0.1%
0.2%
Other
13.6%
11.7%
10.2%
6.1%
1.6%
1.4%
1.2%
1.4%
1.9%
1.8%
1.9%
1.5%
Sources:
Currency units per U.S. dollar
Weighting
Euro
57.6%
Japanese yen
13.6%
Pound sterling
11.9%
Canadian dollar
9.1%
Swedish krona
4.2%
Swiss franc
3.6%
Source:
Yen Currency
Furthermore, Yen’s monetary value floats independantly and isn’t correlated to the strength of an economy, especially because the value of the dollar isn’t going down due to inflation but just in terms of relative value. In looking at Japan, which has, without a doubt a top-notch economy as the weak dollar also has nothing to do with our deficit because if you look at japan again they have one of the biggest budget surpluses in the world and postive trade balance. The relative value of the yen is determined in foreign exchange markets by the forces of supply and demand. The supply of the yen in the market is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services, or assets. The demand for the yen is governed by the desire of foreigners to buy goods and services in Japan and by their interest in investing in Japan. Japanese exports were costing too little in international markets, and imports from abroad were costing the Japanese too much. The rise in the current account surplus generated stronger demand for yen in foreign-exchange markets, but this trade-related demand for yen was offset by other factors. A wide differential in interest rates, with United States interest rates much higher than those in Japan, and the continuing moves to deregulate the international flow of capital, led to a large net outflow of capital from Japan. This capital flow increased the supply of yen in foreign-exchange markets, as Japanese investors changed their yen for other currencies to invest overseas. The yen’s increased value made Japanese exports less price competitive and imports more price competitive, which should have brought down the value of trade and current account surpluses.
Source:
The relative value of the yen is determined in foreign exchange markets by the economic forces of supply and demand. The supply of the yen in the market is governed by the desire of yen holders to exchange their yen for other currencies to purchase goods, services or assets. The demand for the yen is governed by the desire of foreigners to buy goods and services in Japan and by their interest in investing in Japan.
International accumulation of foreign reserve currencies
Currency
Percentage of global currency reserves held in the particular currency, expressed in US dollars
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
US dollar
59.0%
62.1%
65.2%
69.3%
70.9%
70.5%
70.7%
66.5%
65.8%
65.9%
66.4%
65.7%
Euro
-
-
-
-
17.9%
18.8%
19.8%
24.2%
25.3%
24.9%
24.3%
25.2%
German Mark
15.8%
14.7%
14.5%
13.8%
-
-
-
-
-
-
-
-
Pound sterling
2.1%
2.7%
2.6%
2.7%
2.9%
2.8%
2.7%
2.9%
2.6%
3.3%
3.6%
4.2%
Japanese yen
6.8%
6.7%
5.8%
6.2%
6.4%
6.3%
5.2%
4.5%
4.1%
3.9%
3.7%
3.2%
French franc
2.4%
1.8%
1.4%
1.6%
-
-
-
-
-
-
-
-
Swiss franc
0.3%
0.2%
0.4%
0.3%
0.2%
0.3%
0.3%
0.4%
0.2%
0.2%
0.1%
0.2%
Other
13.6%
11.7%
10.2%
6.1%
1.6%
1.4%
1.2%
1.4%
1.9%
1.8%
1.9%
1.5%
Sources:
Source of data:
Sterling Currency
As a unit of currency, the term pound originates from the value of a pound Tower weight of high purity silver known as sterling silver. The word sterling is from the Old French esterlin transformed in stiere in Old English. Originally a silver penny had the purchasing power of slightly less than a modern pound. In modern times the pound has replaced the penny as the basic unit of currency as inflation has steadily eroded the value of the currency. The coinage had become mere fiduciary currency and the exchange rate in Antwerp where English cloth was marketed to Europe, had deteriorated. In common with other currencies, there is no longer any link to precious metals. The pound sterling was used as the currency of many parts of the British Empire. As this became the Commonwealth of Nations, commonwealth countries introduced their own currencies such as the Australian pound and Irish pound. This evolved into the Sterling Area where those currencies were pegged to sterling. Now, the pound is freely bought and sold on the foreign exchange markets around the world and its value relative to other currencies therefore fluctuates and has been among the highest-valued of base currency units in the world respectively.
International accumulation of foreign reserve currencies
Currency
Percentage of global currency reserves held in the particular currency, expressed in US dollars
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
US dollar
59.0%
62.1%
65.2%
69.3%
70.9%
70.5%
70.7%
66.5%
65.8%
65.9%
66.4%
65.7%
Euro
-
-
-
-
17.9%
18.8%
19.8%
24.2%
25.3%
24.9%
24.3%
25.2%
German Mark
15.8%
14.7%
14.5%
13.8%
-
-
-
-
-
-
-
-
Pound sterling
2.1%
2.7%
2.6%
2.7%
2.9%
2.8%
2.7%
2.9%
2.6%
3.3%
3.6%
4.2%
Japanese yen
6.8%
6.7%
5.8%
6.2%
6.4%
6.3%
5.2%
4.5%
4.1%
3.9%
3.7%
3.2%
French franc
2.4%
1.8%
1.4%
1.6%
-
-
-
-
-
-
-
-
Swiss franc
0.3%
0.2%
0.4%
0.3%
0.2%
0.3%
0.3%
0.4%
0.2%
0.2%
0.1%
0.2%
Other
13.6%
11.7%
10.2%
6.1%
1.6%
1.4%
1.2%
1.4%
1.9%
1.8%
1.9%
1.5%
Sources:
Source:
Explain why these changes have taken place. What does the recent relative performance of these currencies tell us about their likely future relative value?
The arrival of currencies is watershed in the relationship of one country to the other. Since, the United States has been in economic and military terms as Europe is disregarded as politically divided its economy overregulated and undynamic. The euro defies that assumption. The changes of the currency value take place in possibly supporting to have better assumption of certain financial and economic challenge and eventually will have such political weight which neither side now wishes to contemplate. For instance, Europe’s currency value will become a competitor to the dollar as an international reserve currency, internationally recognized store of secure value and as a denominator of international trade. Thus, Japanese government proposed that Europe, United States and Japan set exchange-rate to reestablish secure global currency value and relationships. The performances of the currencies indicate that market value is changing as there is increase in the prices of goods and services for example.
Therefore, it will inform the society and the general public that only the desired market can decide currency values. Then, the dollar, euro, sterling as well as yen now will float against one another like for example, if central banks in Asia and oil-exporting countries decide to shift their soaring foreign-exchange reserves from dollar financial assets into other currency value such as euro, making it possible for dollar strength to vanish. Lastly, the relative value of each currency fluctuates, depending on international market conditions it may make sense to use the currency changeover as an occasion to develop an electronic product catalogue that communicates with the article and price stem in the company’s databank. The advantage is one can update price lists together with the appropriate sales and marketing documents continuously and efficiently.
NOTES
Credit:ivythesis.typepad.com
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