Summer 1997 - Volume 3, No. 1
Tennessee Trade-Weighted Dollar Index
The dollar's relentless rise over the first part of 1997 has at least briefly abated. The June Tennessee trade-weighted dollar index stood at 117.76, virtually unchanged from the spring. The index peaked in April, breaking the 118 mark for the first time. While European currencies (except for the British pound) continued to fall against the dollar, albeit at a slower rate, Asian currencies began to strengthen. In fact the largest change among the currencies composing the index was the rise of the Yen, which gained nearly seven percent against the dollar during this last quarter. Perhaps surprisingly, Hong Kong remained stable, posting a very slight increase against the dollar. Whether this Asian trend will continue in the wake of the recent crash of Thailand's Baht remains to be seen. Both Canadian and Mexican currencies weakened over this past quarter, though neither decline was very significant. Though the dollar has stopped its rise, at least momentarily, Tennessee exporters continue to face their toughest currency environment in years. Past experience tells us the strong dollar is undoubtedly cutting into the state's exports. How long this environment will last seems to be anyone's guess experts expect a continued strengthening dollar at least over the short term.
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