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Visualizing Currencies’ Decline Against the U.S. Dollar

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Infographic of currency performance against U.S. dollar

Visualizing Currencies’ Decline Against the U.S. Dollar

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In a highly volatile and difficult year for many currencies and equities, the U.S. dollar has been a safe haven for investors.

The greenback has provided exceptional stability, with almost every currency around the world declining against the U.S. dollar in 2022.

This graphic visualizes almost 50 years of the Dollar Index’s returns along with the decline of major currencies against the U.S. dollar in the past two years using price data from TradingView.

U.S. Dollar and Major Currencies’ Returns in 2022

As shown in the graphic above, the past two years have seen nearly every major currency lose value against the U.S. dollar.

One of the currencies hit hardest is the euro, which briefly fell below parity (meaning the euro was worth less than one U.S. dollar) in September and October of 2022, before recovering with a 5.3% rally in November.

Currency2021 Returns2022 YTD Returns
Japanese Yen (JPYUSD) 🇯🇵-10.4%-14.7%
Indian Rupee (INRUSD) 🇮🇳2.0%-9.6%
Pound Sterling (GBPUSD) 🇬🇧-1.1%-8.0%
Chinese Yuan (CNYUSD) 🇨🇳2.7%-8.6%
Euro (EURUSD) 🇪🇺-7.0%-6.0%
Canadian Dollar (CADUSD) 🇨🇦0.7%-6.6%
Australian Dollar (AUDUSD) 🇦🇺-5.7%-5.2%
Swiss Franc (CHFUSD) 🇨🇭-3.0%-1.1%

2022 YTD Returns as of December 14th 2022. (Source: TradingView)

However, the Japanese yen was the major currency hit hardest, having fallen more than 25% since the start of 2021. At the yen’s lowest point this year in October, the currency breached 24-year lows, resulting in the Bank of Japan intervening with $42.8 billion to support the country’s falling currency.

The Swiss franc and Canadian dollar have been the most resilient major currencies against the U.S. dollar since 2021, largely due to the financial and political stability of those nations. Along with this, Canada has benefitted from surging crude oil prices in 2022, exporting the majority of its crude oil across its southern border to America.

Three Reasons for the U.S. Dollar’s Strength in 2022

A variety of factors have contributed to the U.S. dollar’s strength in 2022. The rapid raising of interest rates by the Federal Reserve and tightening of their balance sheet has resulted in U.S. dollars becoming a more scarce and valuable yield-bearing asset.

As interest rates have risen, so have yields for savings accounts and fixed-income securities like U.S. treasuries, making them a more attractive alternative for investors.

At the same time, falling equity prices (especially in the technology sector) only further incentivized investors to pull out of riskier equity markets into the safety of the dollar.

Lastly, compared to many other global economies, the U.S. economy has remained resilient with the fewest risks on its horizon. Europe continues to face an ongoing energy crunch with the Russia-Ukraine conflict nearby, while China’s zero-COVID policies have hampered the country’s manufacturing sector, as well as other industries.

How Will Currencies Fare in 2023?

While the U.S. dollar has surged for much of 2022, its rally has started losing steam in the final months of the year.

In September of 2022 the Dollar Index was up 20% on the year reaching a high of 114.8, but has since retreated and given back more than half its gains for this year so far.

Investors around the world will be watching closely to see if the U.S. dollar’s rise will continue, or if this end-of-year reversal will carry through and provide major currencies some relief going into 2023.

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Currency

Charted: How Major Currencies Did in 2023

Euro, yen, and yuan—one is not like the other as we visualize the best and worst returns of the world’s major currencies.

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A cropped bar chart showing the 2023 return of major currencies against the U.S. dollar.

Charted: How Major Currencies Performed in 2023

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

The U.S. Dollar Index peaked in fall 2022, the highest it had been in nearly two decades, rising in response to aggressive interest rate hikes.

The index measures the value of the U.S. dollar against a basket of major currencies from six countries. A gain indicates the dollar is appreciating against the basket and vice-versa. The euro is the biggest component on the index and thus sways the index value and return.

In 2023, the U.S. Dollar Index declined off its highs while still maintaining a fairly elevated level as interest rates have stayed steady.

But how have other major currencies fared against the dollar?

We visualize the returns of 12 currencies against the U.S. dollar, using data from TradingView.

Ranked: Best and Worst Performing Currencies in 2023?

By far, the best performing major currency of 2023 was the Mexican peso, which appreciated nearly 15% against the dollar.

The peso appreciated significantly thanks to aggressive interest rate hikes by its central bank (currently at 11.25%) which pulls money into the country as investors chase better returns.

However, the peso’s continued appreciation could negatively impact the competitiveness of Mexico’s exports. In tandem, Asian imports to the country become cheaper which can hurt the country’s domestic industrial sector.

Here’s how other major currencies performed in 2023.

RankCurrency2023 Returns
1🇲🇽 Mexican Peso+14.8%
2🇨🇭 Swiss Franc+9.8%
3🇬🇧 British Pound+5.3%
4🇪🇺 Euro+3.2%
5🇨🇦 Canadian Dollar+2.3%
6🇦🇺 Australian Dollar-0.1%
7🇮🇳 Indian Rupee-0.5%
8🇳🇿 New Zealand Dollar-0.5%
9🇨🇳 Chinese Yuan-2.8%
10🇯🇵 Japanese Yen-7.0%
11🇷🇺 Russian Ruble-17.5%
12🇹🇷 Turkish Lira-36.6%
N/A🇺🇸 U.S. Dollar Index-2.0%

From across the Atlantic, the Swiss franc, British pound, and euro all gained as well.

Meanwhile, the Japanese yen, while down 7% for 2023 has a much stronger outlook for 2024, with the Bank of Japan likely to raise rates to curb inflation, strengthening the currency.

At the bottom of the list, the Russian ruble and Turkish lira lost nearly one-fifth, and one-third of their value against the dollar, respectively.

The lira has been declining steadily for over a decade now (down 94%) as the country has witnessed several political upheavals that have shaken the economy as well as investor sentiment.

Meanwhile Russia’s economy relies heavily on fossil fuel exports, a sector hit hard by Western sanctions. With fewer buyers for its oil and gas, export revenue has declined, reducing the country’s trade surplus.

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