There are over two centuries worth of history behind the US dollar exchange rate. Today, the US dollar is considered as a benchmark for currency. Whenever a currency is mentioned in a generic article, the US dollar is used to express it. One reason for this maybe the internet, the internet is now a global marketplace where billions of dollars exchange hands on a daily basis. This is mainly due to the convenience the internet provides with money transfer with the advent of services such as Paypal. However, the take home lesson is that most trading online takes place using the US dollar.
Virtually any global phenomenon affects the dollar exchange rate. The dollar is the most traded currency in the FOREX (foreign exchange) market.
The first notable point in history was during the time of the inception of World war 1, currency values were then assigned based on how much Gold can be traded in for a certain currency. Thus, direct exchange of currencies was not possible, if two currencies were to be traded, they will have to be traded to Gold and then converted to the other currency. The next incident in terms of dollar exchange rate occurred right about the time of World War 2, the Americans lent arms to the British which were to be paid back after the British economy was booming following the war, however, the US requested repayment before the war ended, this lead to a boom in America's economy while the British monetary unit collapsed. The dollar exchange rate grew exponentially over a short period of time.
The following major shift in foreign money occurred throughout the start of 1971, the US declined the opportunity of direct conversion of the dollar into Gold. Since then, the dollar exchange rate solely had minimal fluctuations and operated easily until recently in 2007, when the dollar exchange rate began to rapidly depreciate. The explanations for the decline had been all normative and numerous factors were blamed, such because the war, and the shortage of growth in the US among several other theories. Some economists declare that the meltdown of the dollar exchange rate in 2007 was because of the resolution to disable the conversion of Gold throughout the 70s. Again, this is speculation.
As aforementioned, the US dollar has seen various up and downswings, the 2007 crisis shows that changes can be sporadic and unpredictable. Nevertheless, the US dollar continues to be the most widely used currency.
Virtually any global phenomenon affects the dollar exchange rate. The dollar is the most traded currency in the FOREX (foreign exchange) market.
The first notable point in history was during the time of the inception of World war 1, currency values were then assigned based on how much Gold can be traded in for a certain currency. Thus, direct exchange of currencies was not possible, if two currencies were to be traded, they will have to be traded to Gold and then converted to the other currency. The next incident in terms of dollar exchange rate occurred right about the time of World War 2, the Americans lent arms to the British which were to be paid back after the British economy was booming following the war, however, the US requested repayment before the war ended, this lead to a boom in America's economy while the British monetary unit collapsed. The dollar exchange rate grew exponentially over a short period of time.
The following major shift in foreign money occurred throughout the start of 1971, the US declined the opportunity of direct conversion of the dollar into Gold. Since then, the dollar exchange rate solely had minimal fluctuations and operated easily until recently in 2007, when the dollar exchange rate began to rapidly depreciate. The explanations for the decline had been all normative and numerous factors were blamed, such because the war, and the shortage of growth in the US among several other theories. Some economists declare that the meltdown of the dollar exchange rate in 2007 was because of the resolution to disable the conversion of Gold throughout the 70s. Again, this is speculation.
As aforementioned, the US dollar has seen various up and downswings, the 2007 crisis shows that changes can be sporadic and unpredictable. Nevertheless, the US dollar continues to be the most widely used currency.
About the Author:
View conversion tools and see the Dollar exchange rate compared to other world currency in real time each day.
No comments:
Post a Comment