WASHINGTON, D.C., U.S. — The value of the U.S. dollar against other major currencies strengthened considerably in 2015, accelerating a trend that began in 2011, according to the U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS). A strong dollar holds down agricultural exports, while increasing imports, ERS said.
The agricultural trade-weighted exchange rate is a broad measure of the value of the dollar against 79 foreign currencies, weighted by their share of U.S. agricultural exports. The dollar exchange rate affects the price of U.S. commodities in foreign markets, with a stronger dollar making U.S. products more expensive in terms of the local currency of importing countries. On the other hand, a stronger dollar makes U.S. imports less expensive in dollar terms.
Since the dollar exchange rate affects the relative price of U.S. and foreign commodities in global markets, it can have important implications for agricultural trade. With the strengthening of the dollar in 2015, U.S. agricultural exports are expected to fall below 2014 levels, while imports are forecast to increase.
ERS exchange rate projections used for the USDA Agricultural Projections to 2025 report (the current Agricultural Baseline) suggest the dollar will continue to gain strength—but at a slower pace—in 2016 and 2017, before trending lower from 2018 through 2025. This chart is based on the International Macroeconomic Data Set.
