By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- With the value of the U.S. dollar a controversial topic in some quarters, one market strategist said Wednesday that the greenback's worth largely depends on how one views it, with two indexes telling markedly different stories.
"One barely registers the strong dollar trends of the 1990s, while the other one thinks the buck appreciated close to 50% over the same period," wrote Nicholas Colas, chief market strategist at BNY ConvergEx Group, in a note.
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The IntercontinentalExchange Inc. /quotes/comstock/13*!ice/quotes/nls/ice (ICE 105.62, -0.85, -0.80%) 's dollar index /quotes/comstock/11j!i:dxy0 (DXY 81.59, -0.10, -0.12%) , which contrasts the currency against six others, failed to capture the dollar's strength in the 1990s against a wide basket of emerging markets, while the Federal Reserve's trade-weighted index does. See the Fed's Nominal Broad Dollar Index.
The Federal Reserve's trade-weighted dollar index has the currency losing 10.5% of its value from 2000 to the present, while the dollar index has it dropping nearly 24% in the same time span, calculates Colas.
The Fed's broad index could be viewed as a more comprehensive gauge of the currency's value, as it includes many more components -- the biggest being the euro, representing 18% of the total. The dollar index, which has been around nearly 40 years, contrasts the greenback against six currency rivals. The euro represents 57.6% of the total.
"The DXY is only one narrow measure of the strength of the currency. Against a broader index of currencies, the dollar may not be a superstar, but it isn't the absolute dog portrayed by some," according to Colas.
Some exchange-traded funds attempt to reflect the changing value of the U.S. dollar.
The PowerShares DB U.S. Dollar Index Bullish Fund /quotes/comstock/13*!uup/quotes/nls/uup (UUP 23.74, +0.01, +0.04%) , which is designed to replicate the performance of being long the U.S. dollar against the same six currencies as in the ICE dollar index, has risen 2.3% this year.
On Wednesday, the dollar fell against the euro following stronger-than-expected manufacturing data from France and Italy. Read more on currencies.
Kate Gibson is a reporter for MarketWatch, based in New York.
