I have always wonder why its so much stronger ? when you go to Japan, everything is cheaper in a sense and the U.S dollar means more in Japan. Why is that ?
In: Economics
It’s because the US works hard to keep its currency stable, and because the US has the largest and most diversified economy in the world.
The Euro is the second most stable currency in the world because the Euro’s economic union is the second largest and most diversified economy after the US.
The Pound is also relatively stable, but because the British economy is smaller, it is more prone to fluctuations. Canada is in the same boat, with a smaller population and an economy that is not nearly as diversified as the US economy is, which causes its value to fluctuate more.
Meanwhile the Yuan is not viewed as a reserve currency because its price is too heavily manipulated by the PRC government, which no one considers trustworthy. The Yuan used to be pegged to the USD, and is no longer ostensibly pegged… but it’s widely viewed as still being heavily manipulated.
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