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Is the Dollar Overvalued?

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Despite continuing weakness in U.S. economic activity and sharp reductions in the Federal Reserve’s key target interest rates, the dollar remains strong in foreign exchange markets. Its persistence has surprised many observers. Some now complain that the dollar is overvalued, implying that its exchange value is fundamentally incorrect, detrimental to U.S. economic growth, and ultimately unsustainable.

Suggested citation: "Is the Dollar Overvalued?" Federal Reserve Bank of Cleveland, Economic Trends, no. 02-02, pp. 08-09, 02.01.2002.

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