Trade-weighted US dollar index

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The US dollar weighted trading index , also known as broad index , is a measure of the US dollar's value relative to other world currencies. This is a trade-weighted index that increased on the previous US Dollar Index by using more currencies and updating the annual weight (not never). The base index value was 100 in March 1973.

Video Trade-weighted US dollar index

History

The trade-weighted dollar index was introduced in 1998 for two main reasons. The first is the introduction of the euro, which eliminates some currencies in the standard dollar index; the second is to follow new developments in US trade.

Maps Trade-weighted US dollar index

Currency included

In the longer US Dollar Index, significant weight was given to the euro, as most of the US Trade in 1973 was with European countries. As US trade evolves over time, the weight in the index is unchanged and is becoming obsolete. To more accurately reflect the strength of the dollar relative to other world currencies, the Federal Reserve created a weighted US dollar trade index, which includes a collection of currencies larger than the US dollar index. The areas included are:

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Mathematical formula

Based on the nominal exchange rate

This index is calculated as the geometric value of the bilateral exchange rate of the currency included. The weight given for the value of each currency in the calculation is based on trade data, and is updated annually (the index value itself is updated much more often than weights). Index value when ${\ displaystyle t}$ is given by the formula:

$Â\; Â{\displaystyle Â\; Â\; Â\; Â\; Â\; Â\; Â}$ _{          I                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â                          =                  I                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÃ, -   Â 1                         ÃÆ' -                   ?                 Â             =   Â 1                          ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ... N           (     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â           )                                            Â (                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...    ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                 e                                     j                  ,                    t     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,        Â    ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                 e                                     j                  ,                    t                   -                  1     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,        Â        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,                       Â )                           Â      Â  <Â>                              j              ,                t        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,          Â                                {\ displaystyle I_ {t} = I_ {t-1} \ times \ prod _ {j = 1} ^ {N (t)} \ left ( {\ frac {e_ {j, t}} {e_ {j, t-1}}} \ right) ^ {w_ {j, t}}}  Â} .

The real exchange rate is a more informative measure of the dollar value because it calculates for countries whose currency is experiencing a different inflation rate than the United States. This is compensated by adjusting the exchange rate in the formula using the consumer price index of each country. In this more general case, the index value is given by:

$Â\; Â{\displaystyle Â\; Â\; Â\; Â\; Â\; Â\; Â}$ _{          I                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â                          =                  I                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÃ, -   Â 1                         ÃÆ' -                   ?                 Â             =   Â 1                          ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ... N           (     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂï <½Â           )                                            Â (                ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...
    ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                   e                                        j                    ,                       t      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                ?                                      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂà    ÂÂÂÂÂÂÂÂÂÂÂÂÂ...                        p                                             t                                  Â       ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂà    ÂÂÂÂÂÂÂÂÂÂÂÂÂ...                        p                                              j                         ,                         t                                  Â                   <      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,
    ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                   e                                        j                    ,                       t                     -                     1      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,     ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ...                ?                                      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂà    ÂÂÂÂÂÂÂÂÂÂÂÂÂ...                        p                                             t                        -                         1                                  Â       ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂà    ÂÂÂÂÂÂÂÂÂÂÂÂÂ...                        p                                              j                         ,                         t                        -                         1                                  Â                   <      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,                       Â )                           Â      Â  <Â>                              j              ,                t        ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,          Â                                {\ displaystyle I_ {t} = I_ {t-1} \ times \ prod _ {j = 1} ^ {N (t)} \ left ( {\ frac {e_ {j, t} \ cdot {\ frac {p_ {t}} {p_ {j, t}}}} {e_ {j, t-1} \ cdot {\ frac {p_ {t- 1}} {p_ {j, t-1}}}}} \ right) ^ {w_ {j, t}}}  Â} .

dimana

• ${\ displaystyle p_ {t}}  ÂÂ$ dan ${\ displaystyle p_ {t-1}}  ÂÂ$ adalah nilai dari indeks harga konsumen AS pada waktu ${\ displaystyle t}  ÂÂ$ dan ${\ displaystyle t-1}  ÂÂ$
• dan ${\ displaystyle p_ {j, t}}  ÂÂ$ dan ${\ displaystyle p_ {j, t-1}}  ÂÂ$ adalah nilai dari negara ${\ displaystyle j}  ÂÂ$ indeks harga konsumen pada waktu ${\ displaystyle t}  ÂÂ$ dan ${\ displaystyle t-1}  ÂÂ$

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Data Federal Reserve Bank of St. Louis

Federal Reserve Bank of St. Louis, provided "the weighted average of US dollar exchange rates against currencies of a large group of US trading partners" with detailed information. "The broad currency index includes the Euro Area, Canada, Japan, Mexico, China, UK, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, , Sweden, Argentina, Venezuela, Chile, and Colombia. "

This table shows some of the highs and lows of the Weighted US Dollar Trading Index: Broad [TWEXB] from 2002 to April 2017.

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References

src: www.poundsterlinglive.com

External links

• Weighted dollar trading index at St. Louis Fed

Source of the article : Wikipedia