Bank Exchange Rate History
The exchange rate between the dollar and other global currencies change every day. There is no way to consider the dollar's "history" except for major shifts, political events and domestic crises. However, the dollar, sine at least World War II, has been the globe's central currency. In 2003, the dollar made up about 80 percent of global business transactions.
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Exchange Rates
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An exchange rate is the difference in value between one currency and another. Major banks involved in the bond market report the exchange rate as it trades on global currency, bond and commodity markets. Both the Federal Reserve, which is a consortium of private banks, and the Treasury Department have authority over the official exchange rate. Currency is a complex variable, tied intrinsically to supply and demand, political and market dominance, production, central bank policies as well as government spending. The history of a currency's value is the history of its bank exchange rate with the rest of the world.
The U.S. Dollar
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After World War I, the American dollar slowly climbed to the top of the globe's currencies, defeating the British pound. Dollars were valuable for several reasons: first, the sheer size of the American market suggested to the world that production for the American consumer was a sure means of success. Second, it was clear after World War I Europe was in terminal decline and that the Americans were to soon take leadership of the economic world. Third, American production was skyrocketing, and the demand for dollars was easily being absorbed in new production. Inflation was not a problem. Lastly, the U.S. after the war was dedicated to a globalist policy both militarily and economically.
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The Dollar versus the Pound (1945-2008)
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One way to measure the history of bank exchange rates is to compare two major currencies over time. The American dollar and the British pound make excellent examples. The exchange rates follow political events. In 1945, the destruction of World War II forced the pound down, making it only about 20 percent of a dollar. As Britain recovered into the 1960s, that percentage went up to over 30 percent. As the American economy suffered from late 1960s inflation, recession and the oil price hikes, the British pound almost came to about half the dollar's value. In the early 80s when a huge recession was just ending, the pound was valued at about 65 to 70 percent of the dollar. In more recent years, the American recession of 2007-2008 again saw a rise in the pound to about 60 percent of the dollar, where it remains today.
The Dollar versus the Yuan (1981-2009)
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In China, the new Yuan currency, introduced in 1981, is controlled by the state, not bank rates in a market. Initially, the Yuan was valued as almost equal to the dollar, but as China's export economy got off the ground, the currency became cheaper, with one dollar equaling about 8.3 Yuan by the 1990s. Export economies need cheap currencies to price their products lower on international markets. As the dollar slowly fell in value after the 1990s, the Yuan reached about 6 or 7 to the dollar at the end of the 2000s.
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