Why is Dollar the strongest Currency?

US dollar

Well, it may have happened often that you must have heard that the value of your currency fell in the wold economic market. Now, you must be wondering that why is the currency of your country compared to the currency of the United States of America, that is, the dollar. Who knew that Richie Rich’s dog would actually continue to rule the world economy. For those who do not get the reference, his name was also called dollar and his garden had elaborate grass and shrub cuttings shaped as the global currency. Now, you must read ahead to find out why dollar is the strongest currency in the world since time immemorial.

The United States of America is a superpower. It is considered as one of the most developed nations of the world at present. Their currency, the dollar is a global currency. It would be interesting for you to know that global currency is also referred to as reserve currency. In fact, in a more shocking revelation, it was found out that it accounts for approximately 64 percent of the foreign exchange reserve of all known central banks. Yes, I’m now talking on a global level and this includes all countries of the world. That is literally more than half of the foreign exchange reserve of all central banks put together.

What makes the dollar the strongest currency is also the fact that they have a very strong economy. Around $580 billion in U.S. bills are used outside the country. In fact, you would be taken aback to know that a major portion of these bills is in the former Soviet Union countries and in Latin America. No wonder, the currency of the United States of America has such a strong hold over world economy as well. What is even more shocking and acts like the cherry on the creamy cake is that approximately more than one third of the world’s GDP (gross domestic product) is generated and accounted from countries that place their own currency in comparison to the dollar. In fact, there are seven countries in the world so far that have already adopted dollar as their own. This only goes to show that there is an increase in the number of countries following and using one currency. You may argue that why is this not the case with Indian rupee when it is the currency of the world’s leading population? Well, the answer is the size of the country.

India is the world’s largest democracy with innumerable states but, that does not take away the fact that the United States of America has a way larger expanse. Also, their development rate has been the key propeller in this regard.

Lastly, you will also be surprised to know that since it is so widely present in the exchange reserves, it is preferred by a lot of top companies and people. The world economic crisis was also a major reason which gave an instant boost to the value of dollar in nations such as Japan, Germany, France and the United Kingdom.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.

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