Currency Report: The trade-weighted U.S. Broad Dollar Index posted a reading of 120.316 in February, up 0.34% m/m, reversing trend after steadily decreasing since Nov 2022. This index value is up 4.58% on a year on 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 up 7.04%.
Table 1 lists the exchange rates of the 9 steel trading nations/zones that we follow, plus their m/m change. 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. Note that Turkey’s currency data is released on a delay, so the rates presented are one month behind the rest.
Month over month, we saw the Brazilian real, the Euro, and the Mexican peso strengthen vs. the USD in February.
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. Weakening foreign currency 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.