Because of slow economic growth in much of the world, many governments have been engaged in a race to the bottom. That is, governmental policies have been designed to weaken the domestic currency. For example, Japan has engaged Abenomics, which was promoted by Prime Minister Shinzo Abe. In the past year, the yen has weakened from a high of about ¥75/$ to around ¥100/$.
A reason countries engage in currency devaluation is to reduce the cost of exports, which increases exports and economic growth. The U.S. dollar has been rising steadily, recently reaching a three-year high. Although it appears that some of the increase in the strength of the dollar is due to U.S. economic performance, some of the increase is likely attributable to continued weakness in other economies around the world.
