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Here's something you don't see everyday: a look at all the currencies in the
world, from 1949 to 2014.
We looked at currencies during the 1914-1941 period earlier this year:
July 18,
2014: Foreign Exchange Rates 1913-1941 #8: A Brief Summary
June 22,
2014: Foreign Exchange Rates 1913-1941 #7: Switzerland's Independence; Turkey
Avoids Devaluation
June 1,
2014: Foreign Exchange Rates 1913-1941 #6: Hyperinflation in Poland; Russia's
WWI Decline
May 25,
2014: Foreign Exchange Rates 1913-1941 #5: Devaluations By Japan and France
April
27, 2014: Foreign Exchange Rates 1913-1941 #4: Britain Leads the World Into
Currency Chaos
April
20, 2014: Foreign Exchange Rates 1913-1941 #3: The Brief Rebuilding of the
World Gold Standard System
April 6,
2014: Foreign Exchange Rates 1913-1941 #2: The Currency Upheavals of the
Interwar Period
March
30, 2014: Foreign Exchange Rates 1913-1941: Just Looking At the Data
We also looked at major central banks in detail:
August
3, 2014: The Reichsbank, 1924-1941
July 27,
2014: The Bank of France, 1914-1941
July 20,
2014: The Bank of England, 1914-1941
This followed a look at the Fed in the pre-WWI era:
December
23, 2012: The Federal Reserve in the 1920s 4: The Historical Record
December
16, 2012: The Federal Reserve in the 1920s 3: Balance Sheet and Base Money
November
25, 2012: The Federal Reserve in the 1920s 2: Interest Rates
November
18, 2012: The Federal Reserve in the 1920s
Click here for today's contribution:
All the currencies in the world, 1949-2014
The source of this data is the IMF International Financial Statistics
database. The IMF has a lot of free data online at their website, but this
currency info is a subscription service. I got it from a local university,
which has a subscription with the IMF. Because the IMF itself was founded in
1944, we only get postwar data here. I would really like to get pre-1914
currency data at some point.
I mostly did this as a way of thinking about the topic of hyperinflation. I
often say that "almost every country in the world, except for the Anglo
countries (U.S., Britain, Canada, Australia, New Zealand) has experienced
hyperinflation at some point since 1914." But is this true? First: what
do we mean by "hyperinflation"? Most English-speaking people don't
really have any sense of what this word means. Spanish-speaking people know
exactly what it means!
October
13, 2013: What Is "Hyperinflation"?
So, what do we see in the time period since 1949?
This chart shows the exchange rates between various countries and the U.S.
dollar, as of the end of the year, compared to the end of the previous year.
The cells show "green" if the change in exchange rates is less than
3%, either a rise or a decline. The idea is to identify countries that have a
policy of pegging to the dollar, although if there are only one or two green
cells that probably indicates a floating currency that just didn't happen to
vary much over the year. A rise vs. the dollar of any amount, of more than
3%, is shown in a light blue. (If there is a "rise" of hundreds of
percent, that probably indicates a redenomination.) A decline of between 3%
and 10% is shown in purple. The blues and purples show currencies that float
vs. the dollar but don't get too far out of line in any one year. Declines
vs. the dollar of 10% to 50%+ are shown in a sliding scale from light orange
to dark red. If a currency declines by 50% vs. the dollar, for example from 5
Mexican pesos per dollar to 10 pesos per dollar (each Mexican peso being
worth $0.20 to $0.10, a decline of 50%), this implies an eventual rise in
domestic prices of 100% to compensate. We saw earlier that
"hyperinflation" tends to begin with about a 100% rise in domestic
prices over a period of three years. So, a series of orange-to-red years in a
row suggests hyperinflation for that country. A series of light purple boxes
suggests consistent devaluation, but not of the "hyper" variety. Still,
you can do a lot of damage with a trend of 5%-10% average declines in
currency value per year.
There was a lot of turmoil before 1950. There was hyperinflation in Germany,
Japan, China, and probably a few other places. Also, both Britain and France
devalued their currencies before 1950. Since this was still a time of
European empire, a lot of countries that were part of the British Empire
(southern Africa, India) or the French Empire (northern and western Africa,
Indochina), also devalued.
After 1950, things settle down a lot. This was the Bretton Woods period, when
most countries had a currency peg with the dollar (which was in turn pegged
to gold at $35/oz.). Nevertheless, there were a few devaluations, as you can
see. These tended to be one-time "step" devaluations, not a
continuous decline of a floating currency.
In 1971, we see a lot of currencies rise vs. the dollar. The dollar left its
gold peg in 1971 and was devalued.
In the 1980s, there are a lot of currency difficulties worldwide,
particularly in Latin America.
In the 1990s, there is a lot of currency decline in the former Soviet states,
plus the Asian crisis of 1997-98.
Beginning in 2000, declines vs. the dollar become less common, as the dollar
itself was losing value during this time (vs. gold), so other currencies
tended to do well vs. the dollar.
Despite the supposed "fall in the dollar price of gold" (implied
rising dollar) beginning in late 2011 and especially continuing in 2013,
other countries' currencies did not fall vs. the dollar.
But, most of all, we see just how many currency crises there have been,
throughout the world, especially after 1971. Endless hardship and chaos.
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