why has the value of the US dollar gone down?

Question

(in relation to other major currenies)

Answer 1

Economists point to two possibilities.

First, as others have mentioned, the US trade deficit is getting bigger all the time. That means that US citizens are converting their dollars into foreign currency. In other words, this is an increase in the demand for foreign currency, which tends to raise the value of those currencies at the expense of the dollar.

However, there is another important factor that has not been discussed. Foreigners are also less willing to invest in the US economy today than they were just a year ago. This means that the demand for dollars is weaker, which also weakens the US currency.

Answer 2

At the heart of the problem on an international basis is our continuing trend towards huge trade deficits. For 2006, we imported close to 800 billion dollars of goods and services more than our exports. The imports are paid with dollars because foreigners either don't want or don't need more of our products. Cumulatively, foreigners now hold over 4 trillion dollars. Foreign countries feel that these immense dollar holdings are excessive and subsequently devalue the dollar relative to their own currencies.

Domestically, the dollar declines in value because the Federal Reserve has overproduce the dollar ever since their inception in 1913. Federal government deficits have been paid for by the issuance of new dollars every year. As the deficits have increased, so too has the production of dollars. The value of existing dollars is decreased every time a new dollar is issued. The net result is that a dollar issued in 1913 is worth 4 cents today.

Answer 3

we should not say the value of the US dollar has gone done; we rather say the US gov has tried forcing the value of the currencies of the other countries to go up. For example, recently, the US gov has tried forcing the chinese gov to increase the value of chinese currency. when the value of chinese currency goes up, the relative purchasing power of us dollars goes down, thus decreasing the foreign exhcange rate. The decreased relative purchasing power thus helps the internal economy of the US. when the relative prices of the chinese commodities, or imports, goes up, the US citizens are less likely to import or purchase chinese products, and business people are less likely to open new factories in china. this policy would stimulate the internal employment in the U.S.

Answer 4

Because our national debt is getting worse with this war and the Bush administration. Gold has gone up because it is considered a safe haven especially with other countries. Gold is accepted everywhere and is valued the same in the world per troy ounce or per means of measurement in other countries equal to the troy ounce. Gold is sold in every country and is equal. However currency fluctuates based on that countries performance in the world. Considering our dollar has gone down in value because our debt has gone up and our inflation has gone up and our import to export ratio is getting out of wack our countries currency value has gone down because our economy is at risk and not performing as well as it should to stay on top of competing countries currency values!!! Unfortunately our politic ans are all bleeding us and patting themselves on the back and giving all the other countries our money and not fixing the problems at home starting with the Health care system!!!

Answer 5

Because it is directly tied to the value of gold, and if gold goes down so does the dollar.

Answer 6

America as a country is in serious debt and our exports are in decline.