U.S. Dollar Versus Euro and Yen

Chart of the Week for June 29 - July 5, 2007

Throughout much of 2006 the U.S. Dollar (USD) depreciated relative to the Euro (European currency), particularly in the second quarter, as was shown in the May 12, 2006 Chart of the Week. At that time, several causes for the USD depreciation were cited including the expanding U.S. trade deficit and the signaling of the end of interest rate hikes by the Fed. As the USD declines versus another country’s currency, it takes more USD to buy one unit of a foreign currency.

In the graph above, we see thus far in 2007, the USD has continued to depreciate versus the Euro while continuing to appreciate versus the Yen (Japanese currency). For U.S. investors, as the Dollar depreciates relative to the Euro, Euro-based investments (European company's stocks and bonds) will be worth more in U.S. Dollars. With the Dollar appreciating relative to the Yen, the opposite should occur with Yen-based investments worth less in U.S. Dollars.

This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.

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