The Fall of the Dollar

Examining the forces that affect the value of nations’ currencies is beyond the scope of this book. So is an explanation of the ways in which foreign exchange rates are set. (Again, these are explained in The Complete Idiot’s Guide to Economics.) However, the fall of the dollar as an effect of the recession and of U.S. economic policies is definitely worth discussing here.
A foreign exchange rate is the price of a currency in terms of another currency. For instance, when the euro was introduced as the currency for the EU in 1999, its value was set at the equivalent of $1. You could buy €100 for $100. Since then, the dollar has risen and fallen in terms of the euro (or “against the euro”). These movements occur in the ...

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