Other currencies

The final group of currencies for India, Russia, Saudi Arabia, and Israel represent special cases and thus are discussed on a non-geographic basis.

The growing importance of the U.S.-India bilateral economic relationship is not reflected well in the trade data; it is increasingly a “post-industrial” elationship. Included are skilled labor imported from India and information services outsourced to India.

Import weights have been increasing steadily since the late 1980s, which in all likelihood reflects the modernization of the Indian economy far more than the decline in the rupee (INR). Export weights to India have jumped since 2001 even as the rupee has remained near its lows.

Export weights to Russia fell during the country’s 1998 default and have rebounded since the ruble’s (RUB) modest recovery. Bilateral trade between the U.S. and Russia is very small and is confined to specialty goods and minerals.

The increasing import weights from Israel during the shekel’s (ILS) 1982-2002 decline are as expected in classic theory. The generally increasing export weights to Israel during this same period are antithetical to classic theory. Too much U.S.- Israel trade is dollar-denominated or is confined to sectors such as technology and military hardware for currency movements to be a real factor.

Finally, we come to a special case — Saudi Arabia. The riyal (SAR) is de facto fixed — note the range — and import weights skirt near zero. Their principal export is priced in USD. Export weights to Saudi Arabia have declined somewhat over the years, but given the importance of military hardware and other sensitive exports to Saudi Arabia, this data stream probably does not reveal much.