The US dollar index is an index that comprehensively reflects the US dollar exchange rate in the international foreign exchange market and is used to measure the degree of exchange rate changes of the US dollar against a basket of currencies. It measures the strength of the US dollar by calculating the comprehensive rate of change between the US dollar and a selected basket of currencies, thus indirectly reflecting the changes in US export competitiveness and import costs.
The dollar has experienced two crises. The first crisis broke out between 1973- 1976, which was marked by the complete decoupling of the dollar from gold and the collapse of the Bretton Woods system. The second crisis broke out between 1985- 1987, which was marked by the signing of the Plaza Accord and the collapse of the American stock market.
On the surface, this round of dollar adjustment, which began at 200 1, is the result of the Bush administration's adjustment of the "strong dollar policy" pursued by the Democratic government after the mid-1990s. Si Nuo, the former US Treasury Secretary, delivered a speech on "Strong Dollar Policy" at the meeting of finance ministers of seven western countries on May 17, which is widely regarded as a signal that the United States is pursuing a weak dollar policy. Behind the policy changes, economic factors are still at work. According to Goldman Sachs' forecast, the budget deficit of the United States in the next 10 year will reach 5.5 trillion US dollars, and the trade deficit under the current account will exceed 5% of GDP. The continuation of the situation in twin deficits is the basis for the weakening of the dollar policy. What's more, the US dollar interest rate is at its lowest point in 45 years. Low interest rates and the US war on terrorism have led to the reversal of international capital inflows, making it difficult to make up for the balance of payments deficit. On the whole, twin deficits, low interest rates and terrorist attacks lead to international capital outflows, which are the basic reasons for the mid-term depreciation trend of the US dollar.
Compared with the dominant factor of the three-time intermediate adjustment trend of the US dollar, the international capital flow caused by the development difference of the main economic growth forces and the change of exchange rate mechanism caused by it are the main reasons. Every industrial transfer and the emergence of emerging strong growth regions mean the redistribution of monetary interests, which is finally reflected in the formation of a new exchange rate mechanism. The change of mechanism will prompt this round of adjustment to be completed as soon as possible.