A Correct Value for the Dollar?

The dollar’s rapid appreciation in foreign-exchange markets between mid- 1980 and February 1985 greatly reduced the international competitiveness of many U.S. industries, contributed to unemployment in the trade-sensitive sectors of the economy, and heightened calls for protectionist legislation. Although the dollar has since depreciated in foreign-exchange markets, many analysts contend that it remains “overvalued” or “too high.”