Alroy Commentary - What are U.S. Dollar Index and Trade-Weighted Dollar Index?
As one of the main currencies in the world, investors and businessmen pay a lot of attention to the movement in U.S. Dollar. U.S. Dollar Index is an index which measures the movement of U.S. Dollar against 6 major currencies, i.e. Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc, in the world. Euro accounts for the largest proportion in the index, it weighted 50.14 percent in the index. Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc weighted 13.6 percent, 11.9 percent, 9.1 percent, 4.2 percent and 3.6 percent in the index respectively. The weighting of a currency depends on the trade volume between that country and U.S. If the index moved higher by 5 percent, that means U.S. Dollar appreciated by 5 percent against those currencies in general, vice versa.
You may find the U.S. Dollar Index only included developed market currencies in it. To better reflect the value of U.S. Dollar against foreign currencies, U.S. Federal Reserve formed Trade-Weighted Dollar Index in year 1998. Besides the currencies stated above, developing currencies such as China Yuan, Mexico Peso and Malaysia Ringgit etc are included in the index. Although U.S. Dollar Index is still the indices commonly used in the financial world, economists believe Trade-Weighted Dollar Index can better reflect the situation in U.S.
Copyright ©2015. Alroy Financial Services Limited. All rights reserved. Member of Hong Kong Professional Insurance Brokers Association. Membership No. M-437. |
Follow Us: Show: Full Site | Mobile site |
|
The information of this page is for reference only; it does not constitute any selling purpose, solicitation of buying and recommendation for you to participate and complete any transaction. |