For example, 1 Kuwaiti dinar = 3.26 USD = 266 INR, but the USD is strongest of them all
In: 9
In terms of having a higher unit value, the basic unit of currency is, in itself, meaningless.
Yes, a dollar is worth less than a dinar… but it’s arbitrary what the size of that basic unit is… I could compare a dinar to $10 and we could say the “$10” is worth more. It’s even marked that way for Japanese yen… when reporting the exchange rates, it’s dollars vs. 100 yen.
As others have written, what we’re really interested in are whether it’s an effective store of value (consistent value) and whether we can use it readily.
You can readily exchange a U.S. dollar for whatever currency you want, and in many places use it directly to purchase goods and services. By contrast, if you have rupees and need Malaysian ringgit, you probably have to exchange rupees for dollars (or Euros, or pounds…) and the dollars for ringgit. Easily converted, easily used, that’s a useful currency.
Latest Answers