US dollar: Is it worth it?

US dollar currency signs are starting to fall.

The US currency, the greenback, has been hit by a sharp drop in the value of its major rivals in the past two weeks.

A week ago, the Japanese yen was up 1.5 per cent and the euro was up 4.6 per cent.

Today, it is down 0.8 per cent against the euro.

However, this is a relatively minor decline in the US dollar as it is still worth about 70 per cent of what it was worth last week.

It was worth about $1.3tn at its peak in late December, according to data from the US Federal Reserve.

But in the last week, the value has dropped by a whopping 26 per cent, according the Reserve Bank of New Zealand.

“This is a big drop,” said Dr Simon Henshall, director of monetary policy at the University of Melbourne.

And that will make the dollar much more attractive to other countries, he said.

As a result, the Bank of Japan is raising interest rates by a quarter-point to 3 per cent this month, from 2 per cent in January.

Mr Henshill believes the yen will continue to lose value in the coming months.

Australia and New Zealand have been hit particularly hard by the plunge in the dollar.

Australian shares are down 9 per cent so far this week, with the Nikkei down 12 per cent since the beginning of the week.