It is that fundamentalists who support his analysis of the value of the dollar in a wide number of variables are not in agreement. Numerous indicators that throw hand to assess the value of the American currency, reaching different conclusions which generates a bit of bewilderment. Cannot choose one specifically because they all have weaknesses. What determines the value of the dollar? In a simple and concrete response, the strength of the American economy is what determines its value. Going to the detail, we should see how the main economic variables such as trade balance and current account, fiscal spending and the public deficit, interest rates, inflation and the growth of the economy behave both real and potential. While the model that uses the OECD to assess the value which should be the currency, said that the dollar is undervalued against the euro, other estimates show otherwise. Most of the indicators that economists use point out that the dollar is overvalued against the yuan, but some show that it is too cheap against the euro.
Even the rate of the dollar of Intercontinental Exchange, which measures its performance against a basket of six major currencies of the world dominated by the euro, shows a weaker dollar to future expectations and decreased its minimum of the past 14 months and not far from its historic low of 71,33 75,48 last week, corresponding to April 2008. Looking at some of the main economic variables in the U.S. we have rates of interest at historic lows, a fiscal deficit that has been historic record, a deficit in current account difficult to reverse and an economy that will remain weak more time than desired. From the point of view of economic variables, there are too many arguments that the dollar can be sustained to retrieve value. At its worst, Governments and investors give it back to the dollar.