Should We Be Concerned About the Speed of the Depreciation?
Over the past 12 months, the dollar has depreciated approximately 30 percent on a trade-weighted average basis against the currencies of our major trading partners.’ This recent depreciation, at a rate of approximately 2.4 percent per month, has been the most rapid since the floating-exchange-rate system began in March 1973. In contrast, between September 1977 and October 1978, a period characterized by a worldwide lack of confidence in U.S. economic policies, the dollar depreciated at a pace of only 1.3 percent per month on a trade-weighted basis.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.