What Is The Dollar Index?
The dollar index is a display that has been calculated since 1973 to calculate the value of the six most-convertible currencies in the world. The weight of each currency is different according to the weight of these 6 currencies used in money market.
What Does It Mean?
57.6% for Euro, 13.6% for Japanese Yen, 11.9% for British Pound, 9.1% for Canadian Dollar, 4.2% for Swiss Kron and 3.6% for Swiss Franc. If you look to the right of the table, the currencies weigh in at 57.6% of the euro. European countries are showing the weight of the local currencies in the dollar index calculated before establishing the European Union. German Mark (20.8%), French Frangi (13.1%), Italian Lireti (9%), Netherlands Dutchman (8.3%) and Belgian Frangian (6.4%) were used before 1999 and before the Euro.
Dollar Index Explains What?
There is a need, of course, for the creation of the dollar index, as is the purpose of each invented financial index / instrument. What does the dollar index meet? The answer to the question is simple: calculate the value of the dollar relative to the world’s most used currencies instead of calculating the regional value among the dollar’s currencies; Gives market players and regulators more clarity about dollar value.
Dollar Index Historical Chart
The dollar index resumed trading at the 100 level towards the end of 2015. It is expected that the Dollar Index will again be trading at levels above 100 in the period we are in, as the Federal Reserve (FED) is entering the upward trend to normalize interest rates and the continuation of the monetary expansion in the euro zone. Let’s see how the dollar will enter the period of normalization in the upcoming period.