Thursday, March 29, 2007

The weakening dollar

Several threads I've been reading discuss the declining value of the dollar, but I haven't seen many that put the value of the US dollar in to a long term perspective.

In an effort to understand what's been happening I went to the Federal Reserve site to get some historical data. The time series below plots the major currencies index. Per the FED site: "The major currencies index is a weighted average of the foreign exchange values of the U.S. dollar against a subset of currencies in the broad index that circulate widely outside the country of issue."

The dollar is currently at some of the lowest levels seen in over 30 years relative to world currencies.

My next question is how do I protect my portfolio from currency loss like we've seen, particularly if the trend persists? I don't know the answer currently, but it's worth thinking about since relative to world currencies the dollar is worth 22% less today than it was in Dec 2000.


stephanie feagan said...

Well that sucks! My dollars have dwindled, however, with 2 girls in college, so I'll hope for a rebound in currency value as I climb out of the hellhole that is college these days.

So, I heard you went to a concert last night with a good lookin' chick - how's your hearing today? :) I'm envious - they're one of my favorite bands.

Good to see you blogging! Later...

Button Fuzz said...

Hi Stephanie, thanks for the comments. The drop in the dollar probably won't impact you much for domestic spending like college, but it would make the imports relatively more expensive (a US dollar is worth considerably less now overseas than it was 5-6 years ago).

Evanescense really wasn't all that loud. They did a good job of controlling volume levels. There was a slight bit of ear ringing after the show but not much.