History of the American Dollar. Ups and Downs

8 Dis 2022

• 1825-1906: US begins market operations to maintain the gold standard.
  
• 1924-1931: US engages in number of market operations, including buying foreign currencies, to maintain the gold standard.
  
• 1934-1961: US Treasury creates the Exchange Stabilization Fund (ESF), conducts frequent operations directly in foreign exchange markets.
  
• 1971: Nixon Administration ends USD convertibility to gold, which had become unsustainable due to the large supply of dollars outstanding relative to gold reserves.
  

• 1973: US conducts intervention against German mark.
  
• 1974: US conducts intervention against Japanese yen.
  
• 1976: The USD officially becomes: fiat currency.
  
• 1977-1979: Very easy monetary policy weakens the USD. US intervenes often to support USD.
  
• 1979: Fed announces change in its open market procedures to combat inflation and, partly, to support a weakening USD.
  

• 1980-1981: US intervenes to tame strengthened dollar.
  
• 1985: Major economies agree in the Plaza Accord to devalue the USD relative to the JPY and DEM. In the following weeks, US intervenes often, selling dollars for other G5 currencies.
  
• 1987: Major economies sign Louvre Accord to halt USD depreciation. In coordinated interventions, US intervenes often to buy USD.
  
• 1988 - 1990: US intervenes repeatedly after G7 statement on importance of maintaing exchange rate stability.
  

• 1990: USD appreciates on a backdrop of solid economic growth and dormant inflation.
  
  • 1991-1992: US and European central banks intervene often against the backdrop of a US recession and weakening USD.
    
    • 1993: US intervenes to buy dollars and sell yen.
      
      • 1994: Fed unexpectedly starts rate hiking cycle on an improving economy following the recession. US intervenes repeatedly to support the USD.
        
      
      • 1998: US intervenes to purchase yen in a coordinated intervention to support Japan's economy following the Asian financial crisis.
        
      • 2000: Dot-com bubble bursts. leading to recession.
        
      • 2000: Coordinated G7 FX intervention to support the Euro, initiated by the ECB.
        
      • 2001: 9/11 attacks increase overall uncertainty. Fed lowers rates to prop up the economy.
        
      • 2002: Japan intervenes, selling yen for dollars, often supported by the Fed and ECB.
        
      
      • 2004-2006: Fed tightens policy to curb inflation.
        
      • 2008: Global Financial Crisis ushers in an era of exceptionally easy monetary policy in the US, much of the developed world, and some EMs. Flight to safety strengthens the USD.
        
      • 2010: Euro sovereign debt crisis unfolds.
        
      • 2011: US. UK and European central banks sell yen in a coordinated intervention following a sharp rise In FX volatility as a result of an earthquake in Japan.
        
      • 2011: Standard & Poor's downgrades US sovereign debt; flight to safety nevertheless boosts USD in the months that follow.
        
      
      • 2014: USD begins to rally on the back of stronger growth relative to other major economies and divergence in DM monetary policy.
        
      • 2015: Fed begins raising rates.
        
      • 2015: China surprises global financial markets by devaluing the renminbi for three consecutive days.
        
      • 2017-2018: USD depreciates on the back of convergence in global growth, President Trump's sentiments for a weaker Dollar, and strength in other major currencies, particularly the euro.
        
      • 2018-2019: USD rallies on tax reform and Fed's continuing tightening cycle.
        
      • 2020: COVID-19 spreads globally; recession begins.
        
      • March 2022: Fed begins raising rates again.
        
      • July 2022: Dollar reaches parity with the euro for the first time since 2002.
        
      Source: Federal Reserve Board, Congressional Research Service, Haver Analytics, various news sources, Goldman Sachs GIR.[/I]
      
      Regards, R.Linda!