The Great Fluctuation of US Dollar Currency - Assignment Example

This means that for a nation to acquire certain commodities from such nations then they have to pay relatively higher prices (Weithers, 2011:44). The report above shows for a period of four years where the value for the U.S Dollar has been steadily increasing. The figures show that more than 80% of the currencies studied have lowered in value as compared to the U.S Dollar. There are several reasons why the U.S Dollar has had an increase in value for the past four years. One of the reasons is the high demand for the dollar in the international market.

With increased production and active participation in the international market, the U.S supplied the world with products and services and this increased the ‘attachment’ it has had through trade. To make their commodities valuable, an increase in currency value would occur. Market forces in international trade are critical in determining the current value of a country. Looking at those countries that the U.S majorly supply, it is obvious that their currency is less valuable compared to the U.S Dollars. However, Britain and Switzerland have currencies that are much higher in value than the U.

S dollar because of their control of the market in terms of supply (Towbin and Weber, 2011: 177). Among the things that the U.S government probably did was to regulate the interest rates so as to increase the value of its currency. This might have been done by restricting and controlling the money that runs in the international framework. When the currency is not easily found yet it is in great demand, its value normally goes up automatically. The U.S government might have also deliberately set certain elastic rates that change with time.

For instance, within a period of 48 hours, the currency’s value goes up by some figure. Since the international traders need this currency to help them trade with other partners, they would still buy it at those ‘expensive’ prices.