In this article, we will examine the concept of dollar index, which is a very basic term in the economics literature. In history, the dollar index emerged to show the value of the geometric mean of 6 important currencies against the dollar. The emergence of this index was with the signing of the Bretton Woods Agreement signed in 1944, and the currencies of 44 different countries were fixed on the dollar basis. It was decided to evaluate the value of the dollar exactly over 6. In the following days, this fixed exchange rate practice caused serious damage to the US economy, and many countries, including the US economy. switched to free exchange rate.
In 1973, the FED created the dollar index to measure the value of the US dollar against other currencies. dollar index; The markets has calculated exchange rates, including Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), Swedish Krona (SEK), Swiss Franc (CHF). The upward movement of the dollar index shows that the strength of the dollar has increased in global markets, while the downward movement of the dollar shows that the strength of the dollar has decreased in the global markets.