Word: greenbacked
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...American dollar has been declining irregularly on world money markets for the past five years, but never in the postwar period has its value against major European currencies sunk so low for so long. Since last September, the greenback has fallen roughly 13% against the Belgian franc, Dutch guilder and West German mark, and has lost 20% of its former worth in French and Swiss francs. Last week U.S. currency fell below the level of four francs to the dollar for the first time since 1973-and the consequences of its slump were making some disturbing waves...
...strangest aspect of the dollar's slump is that it continues despite wide agreement among fiscal experts that the greenback is now drastically undervalued. According to the West German Statistical Office, a dollar in the U.S. now buys as many goods as 2.94 marks will in Germany-yet the dollar was being traded in Germany last week for only 2.33 marks. The most immediate reason is that for months, American interest rates have been dropping, while in Europe rates were rising. Seeking the highest return, investors, including American-based multinational firms, have been dumping dollars and buying into currencies...
...place where inflation has not made the dollar cheaper is the Government's greenback-manufacturing Bureau of Engraving and Printing. Rising paper and ink prices have pushed the cost of printing 1,000 bills of any denomination from $7.76 to $11 in the past three years. To cut costs, Bureau Director James A. Conlon wants to re-introduce the $2 bill, which was retired from circulation in 1966-by which time it was being issued in such small numbers that it had become a curiosity...
...bounced around more than the dollar, which is being victimized by exaggerated perceptions of the U.S.'s economic problems, by fluctuations in interest rates and the fickle peregrinations of Middle East oil billions. At one point in the course of some fast and furious trading last week, the greenback was down nearly 14% against the Swiss franc and more than 8% against the West German mark from where it was only two months...
...dollar's true strength or weakness against other European currencies is difficult to judge because of a series of special circumstances. The greenback has dropped just a bit against the French franc because Paris is deliberately holding the value of the franc down in order to gain a trade advantage over other countries. The Italian lira is in trouble as usual but even so, it has gained against the dollar since January-though only because the Bank of Italy has been spending as much as $100 million a day to prop up the lira's price...