In addition to the major currencies of the United States, the US dollar is used as a standard unit of currency in international markets for commodities such as gold and oil (the latter, sometimes called petrocurrency, is the source of the term petrodollar). Some non-US companies dealing with global markets, such as Airbus, have their prices in dollars.
The US dollar is the main reserve currency in the world. In addition to ownership by central banks and other institutions, there is a lot of private ownership, which is believed to be mostly in the hundred-dollar bill (indeed, most of the American paper money is actually held outside the United States). All holdings of bank deposits in US dollars held by non-residents of the United States are known as "eurodollars" (not to be confused with the euro), regardless of the location of the bank holding the deposit (which may be inside or outside the United States).
Economist Paul Samuelson and others (including, on his death, Milton Friedman) have maintained that overseas demand for the dollar allowed the United States to maintain a persistent trade deficit without causing the value of the currency to depreciate or trade flows to readjust. But Samuelson stated in 2005 that in a future uncertain period, these pressures will accelerate the run against the US dollar with serious global financial consequences.
Video International use of the U.S. dollar
International reserve currency
The US dollar is an important international reserve currency along with the euro. The Euro inherited this status from the German mark, and since its introduction, has increased its position, largely at the expense of the dollar. Despite the recent dollar loss against the euro, the currency is still the international reserve currency, with accumulations more than double the euro.
In August 2007, two scholars affiliated with the government of the People's Republic of China threatened to sell substantial reserves in US dollars in response to American legislative discussions about trade sanctions designed to revalue the Chinese yuan. The Chinese government denied that the sale of dollar-denominated assets would be the official policy in the future.
Former Federal Reserve Chairman Alan Greenspan said in September 2007 that the euro could replace the US dollar as the world's major reserve currency. It is "absolutely conceivable that the euro will replace the dollar as a reserve currency, or it will be traded as an equally important reserve currency."
Currency composition of official foreign exchange reserves from 1995 to 2013.
Maps International use of the U.S. dollar
AS. Dollar Index
The US Dollar Index (Ticker: USDX) is the creation of the New York Board of Trade (NYBOT), which was renamed in September 2007 to ICE Futures US. It was established in 1973 to track the USD value against a basket of currencies, which at the time, represented the largest trading partners of the United States. It started with 17 currencies from 17 countries, but the euro's launch put 12 of these into one, so the USDX only tracks six currencies today.
The index is described by ICE as "a geometric calculation - an average of six weighted currencies against the US dollar." Ã, The 100.00 line at USDX was set at its launch in March 1973. This event marks the watershed between the broader margins of the regime of the Smithsonian regime and the general floating period leading to the Second Amendment of the International Monetary Fund Agreement Budget. Since 1973, the USDX has risen as high as 160s and drifted as low as 70s.
USDX has not been updated to reflect the realities of new trade in the global economy, where most trade has shifted strongly towards new partners such as China and Mexico and oil exporting countries while the United States has been de-industrialized.
Dollarization and fixed exchange rate
Countries other than the United States use the US dollar as their official currency, a process known as the official dollarization. For example, Panama has used the dollar along with Balboa Panama as a legitimate payment instrument since 1904 with 1: 1 conversion rate. 1. Ecuador (2000), El Salvador (2001), and East Timor (2000) all adopt independent currency. Former members of the US-administered Trusted Territory in the Pacific Islands, including Palau, Federated States of Micronesia, and the Marshall Islands, chose not to issue their own currency after independence, after all using the US dollar since 1944. Two British dependencies also use US dollars: The British Virgin Islands (1959) and the Turks and Caicos Islands (1973). The Bonaire Islands, Sint Eustatius and Saba, now known as the Dutch Caribbean, adopted the dollar on January 1, 2011, as a result of the dissolution of Dutch Antilles.
The US dollar is the official currency in Zimbabwe, along with the Euro, Pound Sterling, Pula, Rand, and several other currencies.
Some countries that have adopted US dollars issue their own coins: See centavo coins of Ecuador, Balboa Panama, and East Timor centavo coins.
A series of Zimbabwe Bond Coins were put into circulation on December 18, 2014 in denominations of 1, 5, 10, and 25 cents. The 50 cent Bond Bond was released in March 2015. This coin is pegged at the same level as American coins.
Some other countries link their currency to US dollars at a fixed exchange rate. The local currency of Bermuda and Bahamas can be freely exchanged with a ratio of 1: 1 to USD. Argentina used a fixed 1: 1 exchange rate between Argentine pesos and US dollars from 1991 to 2002. Barbados and Belize currencies can also be converted to a 2: 1 ratio. The Netherlands Antillean guilder (and its successor the Caribbean guilder) and Aruban florin are pegged to the dollar by fixed value 1: 1.79. East Caribbean Dollar is pegged to the dollar at a fixed rate of 2.7: 1, and is used by all OECS countries and regions other than British Virgin Islands. In Lebanon, a dollar equals 1500 Lebanese pounds, and is used interchangeably with local currency as a legal means of payment. The exchange rate between the Hong Kong dollar and the US dollar has also been linked since 1983 to HK $ 7.8/USD, and the Macau pataca, pegged to the Hong Kong dollar at MOP1.03/HKD, is indirectly related to the US dollar around MOP8/USD. Some Arab oil producing countries in the Persian Gulf, including Saudi Arabia, peg their currency to dollars, because the dollar is the currency used in international oil trade.
The People's Republic of China renminbi is informally and controversially pegged to the dollar in the mid-1990s at ¥ 8.28/USD. Likewise, Malaysia pegged its ringgit at RM3.8/USD in September 1998, following the financial crisis. On July 21, 2005, the two countries wiped out their pegs and adopted a managed float against a number of currencies. Kuwait did the same on 20 May 2007, and Syria did the same in July 2007. However, after three years of slow appreciation, the Chinese yuan has been de facto pegged back to the dollar since July 2008 at value of ¥ 6.83/USD; although no official announcement was made, the yuan remained around that value in the narrow range since then, similar to the Hong Kong dollar.
Some countries use a crawling peg model, in which the currency is evaluated at a fixed interest rate relative to the dollar. For example, cÃÆ'³rdoba Nicaragua is devauled at 5% per annum.
Belarus, on the other hand, pegs its currency, the Belarusian ruble, to a basket of foreign currency (US dollar, euro and Russian ruble) in 2009. In 2011 it caused a currency crisis when the government became unable to keep its promise. to convert Belarusian ruble to foreign currency at fixed exchange rate. BYR exchange rate fell two-thirds, all import prices rose and living standards fell.
In some countries, such as Costa Rica and Honduras, the US dollar is generally accepted, although it is not officially considered a valid payment instrument. In the northern border region of Mexico and the main tourist zone, it is accepted as if it were the second legal currency. Many Canadian merchants close to the border, as well as major shops in major cities and major tourist spots in Peru also receive US dollars, although usually at prices that benefit merchants. In Cambodia, US records circulate freely and are preferred over the Cambodian romance for large purchases, with riel being used for change to break 1 USD. After the US release in Afghanistan, the US dollar is accepted as if it were a valid payment instrument. The price of the largest ticket items like homes and cars is set in US dollars.
Dollar versus Euro
Not long after the introduction of the euro (EUR; ISO 4217 EUR code) as a cash currency in 2002, and the cost of the Iraq War from 2003, the dollar began to depreciate steadily, just as it did against other major currencies. From 2003 to 2005, this depreciation continues, reflecting a widening current account deficit. Although the current account deficit began to stabilize in 2006 and 2007, depreciation persisted. The fallout from the subprime mortgage crisis in 2008 prompted the Federal Reserve to lower interest rates in September 2007, and again in March 2008, sending the euro to a record high of $ 1.6038, reached in July 2008.
In addition to the trade deficit, the decline in the US dollar is linked to a variety of other factors, including a large spike in oil prices. Economists like Alan Greenspan claim that another reason for the dollar's decline is its declining role as the main reserve currency. Chinese officials hinted at plans to diversify the country's $ 1.9 trillion reserves in response to a falling US currency that also set the dollar under pressure.
However, a sharp turnaround began in late 2008 with the onset of the global financial crisis. As investors sought safe-haven investments in US bonds and Japanese government bonds from financial turmoil, the Japanese yen and the US dollar rose sharply against other currencies, including the euro. However, at the same time, many countries such as China, India and Russia announced their intention to diversify their foreign exchange reserves from the US dollar.
Europe's debt crisis that stretched in 2010 sent the euro falling to a four-year low of $ 1.1877 on June 7, as investors weighed on the risk that certain Euro zone members might default on their government debt. The euro's decline in 2008-2010 has erased half of the 2000-2008 rally.
See also
- Currency reserve
- Dollarization
- Internationalization of renminbi
- International status and use of euro
References
Source of the article : Wikipedia
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