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How Has The Federal Reserve Strategy Of The Last Five Years Affected The U.S. Dollar Exchange Rate?

Many people are curious how the Federal Reserve Strategy over the course of the last five years has affected the exchange rate for the U.S. dollar. Many people wonder why the Federal Reserve implemented the strategy that it did and whether the strategy has been successful. Many people in the field of finance are asked to answer this question and the answer is monetary easing.

Over the last five years the Federal Reserve has worked with a large monetary easing policy and has lowered interest rates. This was done to help provide support for the economy and to keep it from faltering even further. It was also done to support the financial markets. This has amounted to quite a bit of support that has fought off the imminent economic slow down and prevented the recession from getting worse. The economy was plagued and many weaknesses existed within the financial markets. This led to an overall reduction in consumption for the economy over the course of the last five years. In an effort to support the economy the Federal Reserve reduced interest rates which infused new capital into the economy where ever it was necessary. This was an effort to prevent the recession from settling.

The purpose of this action was to infuse liquidity into the economy and increase spending by citizens. This supported the staggering economy. In doing this the U.S. dollar was strengthened against the global currency. Over the last five years the U.S. dollar appreciated and was strengthened by seven percent on average across all of the global currencies.

monetary easing consumer spending was increased which avoided permanent recession. Over the long term this has been successful. While there have been a handful of hiccups along the way the economy has shown no continued signs of falling deeper into a recession. Statistics have shown early signs that the economy has started its recovery.

The Federal Reserve implemented a new policy over the last five years to help the economy. It has affected the exchange rate of the U.S. dollar but has nonetheless been successful at thwarting another economic slow down. In essence it was thanks to reduced interest rates and monetary easing that the Federal Reserve was able to fight off the recession. With their help the financial markets continued to work and the rest of the world was safe from backlashes.

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