The Almighty Dollar and the Currencies that Crushed it in 2016
by Wolf Richter
WolfStreet.com
Jan 1, 2017
A mix of deceptive calm, hair-raising craziness, and big surprises.
Much of the strength of the dollar in 2016 has been ascribed to rising interest rates in the US and minuscule tightening by the Fed – or rather “removing accommodation,” as it likes to say – even as other central banks still engage in QE and negative interest rate absurdities. So the US became a destination for the hot money. By December 20, the dollar reached the highest point since December 2002 against the basket of currencies in the Dollar Index, though it has since eased off somewhat since then.
But the Dollar Index contains only six currencies: euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. It doesn’t even include the currencies of two of the four largest US trading partners, Mexico and China.
So how has a broader range of currencies fared against the dollar? Turns out, some soared, others plunged.
This chart shows how 25 major currencies moved against the dollar in 2016. Note how the euro and the yen, despite major gyrations during the year and efforts by their central banks to crush them, didn’t end the year in a vastly different place than they’d started it, with the euro down 3.2% and the yen up 2.8%. But I circled four of the currencies that did end up in a vastly different place (more on that in moment) because they’re particularly interesting:
The Rest…HERE
