{"id":24126,"date":"2013-06-10T10:39:57","date_gmt":"2013-06-10T14:39:57","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=24126"},"modified":"2016-09-20T14:09:38","modified_gmt":"2016-09-20T18:09:38","slug":"what-are-currencies-really-worth-which-is-overunder-valued","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2013\/06\/10\/what-are-currencies-really-worth-which-is-overunder-valued\/","title":{"rendered":"What Are Currencies REALLY Worth? Which is Over\/Under Valued&#8230;.."},"content":{"rendered":"<p>We have covered this before, but now there is a much different look to the charts as Japan has tried to undercut every currency in order to kick start their economy.<a href=\"https:\/\/podcasts.apple.com\/us\/podcast\/the-disciplined-investor\/id217999782\" target=\"_blank\"><img decoding=\"async\" class=\"size-medium wp-image-257 alignright\" title=\"iTunes Subscribe\" alt=\"\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/itunes_subscribe3-3.png\" \/><\/a><\/p>\n<p>Technicals are on thing, but in the end fundamentals should be the real driver of a currency. In order to get a better read on the valuation of a country&#8217;s currency, we can use the effective exchange rate. Over time this should not deviate to much from the center-line average. When it does, there should be a <!--more-->reversion back.<\/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><a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_YEN-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-24178 aligncenter\" alt=\"RE_YEN\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_YEN-1.jpg\" width=\"582\" height=\"448\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_AUSSIE-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-24179 aligncenter\" alt=\"RE_AUSSIE\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_AUSSIE-1.jpg\" width=\"586\" height=\"448\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_US-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-24180 aligncenter\" alt=\"RE_US\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_US-1.jpg\" width=\"580\" height=\"449\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_Canda-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-24181 aligncenter\" alt=\"RE_Canda\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/RE_Canda-1.jpg\" width=\"577\" height=\"447\" \/><\/a> <a href=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/rE_sWISS-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-24182 aligncenter\" alt=\"rE_sWISS\" src=\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2013\/06\/rE_sWISS-1.jpg\" width=\"586\" height=\"449\" \/><\/a><\/p>\n<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 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","protected":false},"excerpt":{"rendered":"<p>We have covered this before, but now there is a much different look to the charts as Japan has tried to undercut every currency in order to kick start their economy. Technicals are on thing, but in the end fundamentals should be the real driver of a currency. In order to get a better read [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","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-24126","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\/24126","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=24126"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/24126\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=24126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=24126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=24126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}