The U.S. Dollar’s exchange rate, as expressed on any US Dollar exchange rate history chart, will only tell the story of how the dollar has performed against another specific currency. FOREX trades are made strictly in pairs, as one country’s currency versus another. How the U.S. Dollar performs against the Euro Dollar may be totally different than its price relationship to, say, the Japanese Yen.
Being the most active international currency traded anywhere, the United States Dollar (UDS), or Greenback, is a part of every popular currency trade made. As the base currency in some trades, such as when paired with the Japanese Yen (USD/JPY) or as the quote currency in others such as when paired with the Euro Dollar (EUR/USD), it figures into about 90 percent of all FOREX trades.
July, 1944, saw history being made when the 730 members attending the United Nations Monetary and Financial Conference met in a New Hampshire hotel. As representatives from the 44 Allied nations of World War 2, they enacted several things to try to smooth out the world’s current financial situation. One was the inception of the International Monetary Fund, or IMF. The other was the creation of what would come to be known as the Bretton Woods system, named after the hotel in which they were meeting.
A US Dollar exchange rate history chart looking at that time would indicate that the dollar was strong compared to other world currencies. The War, however, was taking its toll on all the involved countries’ financial positions. It was agreed then and there to institute strict monetary policies requiring all member nations to adopt safeguards to rein the exchange rates of their currencies to within certain limits and to peg all currencies to the value of gold.
This all changed, however, when in 1971, the U.S. unilaterally went off the gold standard by canceling the convertibility of dollars directly into gold. No longer requiring its currency to be backed by gold, the U.S. was free to print as much money as it liked. Many experts see this event as the cause of the financial meltdown suffered in the world beginning in 2007.
Currencies are now said to ‘float’ and their values, relative to one another, continually change. Bad economic news in a country can often cause their currency’s value to drop. Good news will frequently have the opposite effect.
Most all FOREX trades involve the USD as one in the pair being traded. It is usually traded against the other major currencies such as the British Pound, Swiss Franc, Euro Dollar, Canadian Dollar and Australian dollar. Any US Dollar exchange rate history chart would have to take into account all of these major currencies to provide a true reflection of the dollar’s real value.
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