Currency Report: The trade-weighted U.S. Broad Dollar Index posted a reading of 113.693 for August 2021, relatively flat month over month (m/m). This index value is down 3.00% on a year over year (y/y) basis.
Figure 1 shows the track of the Broad Dollar Index from 2006 to present. On a 12-month moving average (12MMA) y/y comparison, the index was down 4.38%, though we still see an upward trend in the long-term.
Table 1 lists the exchange rates of the 9 steel trading nations that we follow, plus their m/m change (with the exception of Turkey, who’s currency data has not been released for several months. It’s been excluded for now.) When looking at monthly changes, it’s important to remember that a declining exchange rate indicates growing strength of the foreign currency vs. the U.S. Dollar, since it now requires less foreign currency to equal one USD.
Month over month, we saw the Euro, Indian Rupee, and Japanese Yen strengthen vs. the USD.
At Gerdau, we keep a close eye on the currency market because it has a profound impact on both the import and export of raw materials, semi-finished and finished steel. A strengthening USD is a double-edged sword, as it makes the U.S. market more attractive for other nations to export into the U.S., but it also makes U.S. goods more expensive to export to other nations.