{"id":23202,"date":"2013-02-19T13:57:10","date_gmt":"2013-02-19T18:57:10","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=23202"},"modified":"2016-09-20T13:42:56","modified_gmt":"2016-09-20T17:42:56","slug":"currency-a-better-look-at-valuations","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2013\/02\/19\/currency-a-better-look-at-valuations\/","title":{"rendered":"Currency &#8211; A Better Look at Valuations"},"content":{"rendered":"<p>An effective exchange rate is a measure of \u00a0the value of a currency against a `basket&#8217; \u00a0of other currencies, relative to a base date. It is calculated as a weighted geometric \u00a0average of the exchange rates, expressed in the form of an index. The effective \u00a0exchange rate indices for sterling and other currencies published by the Bank are based \u00a0on the method the IMF uses to calculate \u00a0effective exchange rates for a number of \u00a0industrialized countries.<\/p>\n<p>The weights used \u00a0are designed to measure, for an individual \u00a0country, the relative importance of<!--more--> each of the other countries as a competitor to its \u00a0manufacturing sector. The trade weights \u00a0reflect aggregated trade flows in \u00a0manufactured goods for the period 1989 to \u00a01991 and cover 21 countries. The base date for the index is 1990, and is set at 100.<\/p>\n<p>Below are a few key charts and the longer-term valuations as calculated by the BOE&#8217;s effective exchange rate. We also added the 10-year average and the over\/under valuation by +\/- 20%.<\/p>\n<p style=\"text-align: center;\"><a class=\"twitter-follow-button\" href=\"https:\/\/twitter.com\/andrewhorowitz\" data-show-count=\"false\">Follow @andrewhorowitz<\/a><script type=\"text\/javascript\" src=\"\/\/platform.twitter.com\/widgets.js\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/yen-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23219\" alt=\"yen\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/yen-1.jpg\" width=\"601\" height=\"448\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/usd-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23220\" alt=\"usd\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/usd-1.jpg\" width=\"579\" height=\"444\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/euro-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23221\" alt=\"euro\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/euro-1.jpg\" width=\"578\" height=\"443\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/aust-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23222\" alt=\"aust\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/aust-1.jpg\" width=\"576\" height=\"448\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/canada-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-23223\" alt=\"canada\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/02\/canada-1.jpg\" width=\"581\" height=\"445\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>An effective exchange rate is a measure of \u00a0the value of a currency against a `basket&#8217; \u00a0of other currencies, relative to a base date. It is calculated as a weighted geometric \u00a0average of the exchange rates, expressed in the form of an index. The effective \u00a0exchange rate indices for sterling and other currencies published by [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12],"tags":[284],"class_list":["post-23202","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","tag-currency","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/23202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=23202"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/23202\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=23202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=23202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=23202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}