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
commodities like oil, wheat, steel and probably every other one you need USD, which drives demand. The Russians are requiring other countries to buy their oil in Ruble which has helped prop up demand. While you have Euro and other types, many times bonds sold to foreign investor are USD denominated.
Example might be when Sri Lanka ran out of foreign reserves meant they weren’t able to import anything from food to oil or thats what people feared.
Its also held as a reserve currency for alot of national banks.
The power of a currency comes from what you can buy with it, with INR you are limited to anything from India, with CNY from china hongkong Russia and same with many others, usd on the other hand can be used in all parts of the world to buy whatever you want, this also makes it attractive in black market deals. And it becomes a positive feedback loop the more people can use it the more they trust it which means the more they use it.
You can go to almost any country and they know what a dollar is worth. The fact you can use it everywhere is what makes it so powerful.
All I know is that Costco hotdog and drink is approaching 1 US dollar right now…like $1.15.
In a few words, because it’s the World’s reserve currency, and that’s because the US does a lot of trade and because investors, governments and citizens of the world have faith in the institutions of the US Government.
This all starts back in ww2, maybe ww1. Basically the US has leveraged it power to force other countries to use the dollar for transactions. You have a war, you loan the countries money to rebuild, you set the rules.
Now comes gold and oil, same thing. You take over nations, sponsor rebellions and then “help” with the cleanup setting the rules. Always to require the US dollar to be the transaction currency. Of course all this is possible because the US has been a global superpower for along time. So basically, prosperous economy plus brute force.
Probably has something to do with the US being the most powerful country in the world, and until that changes or it decides otherwise, the US dollar will continue to be the “strongest” in the world. If you’re the one essentially creating the rules, you’re going to bend them to your will. The house always wins is a feature, not a bug.
We’re the country least likely to collapse and also the most involved in global trade. Stability and influence
The majority of taxpayers are beholden to their social contracts. If this balance tilts one way or another then our rating reflects this.
The US is the only major economic power that hasn’t been in a war on its own soil in the last hundred or so years.
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