US Dollar Is Currently On A 60 Month High

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TOP 10 – The Most Expensive World Currencies in 2020

How do you think what is the highest currency in the world today?

Most people believe that the British Pound is the most expensive currency. But actually, it is not. There are at least a few currencies that are more valuable.

To help you get a better understanding of the situation, we compiled a list of the strongest world currencies as of January 20, 2020.

Compare this list with the TOP 10 of the weakest world currencies to see the significant differences.

#1 – Kuwaiti Dinar ($3.29)

Currency code – KWD.

Kuwaiti Dinar rates:
1 KWD = 3.29 USD (Kuwaiti dinar to US dollar).
1 KWD = 2.97 EUR (Kuwaiti dinar to euro).

The highest currency in the world is Kuwaiti Dinar (against the US Dollar).

Kuwait is a small country with enormous wealth. The high value (rate) of its currency is explained by significant oil exports into the global market.

Due to the stable petroleum-based economy, highly developed oil production and export, Kuwait is considered to be one of the richest countries in the world.

More than 80% of the country’s revenue comes from the oil industry, as petroleum production here is the easiest and, therefore, the cheapest among other countries.

Since 2003 the currency was pegged to the US Dollar, but in 2007 the government decided to peg the Kuwaiti Dinar to the weighted currency basket.

Besides the very stable economy, Kuwait is a tax-free country with a very low unemployment rate.

#2 – Bahrain Dinar ($2.66)

Currency code – BHD.

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Bahrain Dinar rates:
1 BHD = 2.66 USD (Bahrain Dinar to US Dollar).
1 BHD = 2.40 EUR (Bahrain Dinar to Euro).

The Bahrain Dinar is the second most valuable currency.

Bahrain is a Persian Gulf island state with a population of just over 1 million people. As in the first case, this country’s largest source of income is the “black gold” exports.

Interestingly, the Bahrain Dinar is pegged to the US Dollar exchange rate, and its rate against the US Dollar has remained stable since 2005.

#3 – Oman Rial ($2.60)

Currency code – OMR.

Oman Rial rates:
1 OMR = 2.60 USD (Oman Rial to US Dollar).
1 OMR = 2.34 EUR (Oman Rial to Euro).

Oman is a country on the Arabian Peninsula. Thanks to its strategic location, it possesses a developed economy and a high quality of life.

The Oman Rial is also pegged to US Dollar as Bahrain Dinar.

Remarkably, the purchasing power of this currency is so high that the government had to issue 1/4 and 1/2 Rial banknotes. On the picture above, you can see 1/2 Rial (Half Rial).

#4 – Jordan Dinar ($1.41)

Currency code – JOD.

Jordan Dinar rates:
1 JOD = 1.41 USD (Jordan Dinar to US Dollar).
1 JOD = 1.27 EUR (Jordan Dinar to Euro).

It is hard to explain the high value of Jordan Dinar. This country is not economically developed, and it lacks essential resources, such as oil.

Nevertheless, one Jordan Dinar costs 1.41 US Dollars, which makes it one of 10 the strongest world currencies.

#5 – British Pound Sterling ($1.32)

Currency code – GBP.

British Pound Sterling rates:
1 GBP = 1.32 USD (British Pound Sterling to US Dollar).
1 GBP = 1.19 EUR (British Pound Sterling to Euro).

Most people consider that British Pound is the strongest world currency, but it only closes the top five of this list.

British Colonies issue their own banknotes, which visually differ from banknotes issued by the Bank of England, but they are valued as 1 per 1.

Therefore, there are several of them: Scottish, North Ireland, Manx, Jersey, Guernsey, Gibraltar Pounds, as well as St. Elena Island Pound and Falkland Islands Pound.

Amusingly, native Britons do not always want to accept “other” Pounds as a means of payment.

#6 – Cayman Islands Dollar ($1.22)

Currency code – KYD.

Cayman Islands Dollar rates:
1 KYD = 1.22 USD (Cayman Islands Dollar to US Dollar).
1 KYD = 1.01 EUR (Cayman Islands Dollar to Euro).

The Cayman Islands are one of the world’s best tax haven. These islands provided licenses for hundreds of banks, hedge funds, and insurance companies.

Thanks to its leadership among tax haven Cayman Islands Dollar costs approximately 1.22 US Dollars.

#7 – European Euro ($1.11)

Currency Code – EUR.

European Euro rate:
1 EUR = 1.11 USD (European Euro to US Dollar).

The Euro currency has strengthened over the past few years. This allowed it to rise in the list of the most powerful currencies. Partially, its strength is explained by the fact that it is the official world currency in European countries, among which you will find several economically developed ones.

Besides, Euro is the second reserve world currency enveloping 22.2% of all world savings (US Dollar has 62.3%).

#8 – Swiss Franc ($1.01)

Currency code – CHF.

Swiss Franc rates:
1 CHF = 1.01 USD (Swiss Franc to US Dollar).
1 CHF = 0.91 EUR (Swiss Franc to Euro).

Switzerland is not only one of the richest countries in the world, but it also belongs to the most stable ones. Its banking system had long been known for its formerly resolute “Bank Secrecy”.

Besides, its high-tech goods are very well known all around the globe.

Pay attention to how extraordinary this banknote looks. This is the only banknote I saw which has a vertical view.

#9 – US Dollar

Currency code – USD.

US Dollar rate:
1 USD = 0.90 EUR (US Dollar to Euro).

Owing to the USA’s world economic leadership, its currency achieved the title “World Reserve Currency”. In other words, you can make dollar payments everywhere (in any country).

#10 – Canadian dollar ($0.75)

Currency code – CAD.

Canadian dollar rates:
1 CAD = 0.75 USD (Canadian dollar to US Dollar).
1 CAD = 0.68 EUR (Canadian dollar to Euro).

The Canadian dollar is the fifth largest reserve world currency. It is often called the “loonie” in honor of the bird depicted on the one-dollar coin.

Out of TEN

Due to the dynamically changing economic and political situation in the world, it is hard for some currencies to remain in this ranking, so here is the list of currencies that left the top ten of previous periods.

Australian dollar ($0.68)

Currency code – AUD.

Australian dollar rates:
1 AUD = 0.68 USD (Australian dollar to US Dollar).
1 AUD = 0.62 EUR (Australian dollar to Euro).

An interesting fact is that the new series of Australia banknotes pictured above will have a tactile feature (Braille) to help the visually impaired community to tell the value of the banknote.

Also, Australia conducts the fight against cash by reducing the share of cash payments while making small retail purchases.

Libyan Dinar ($0.71)

Currency code – LYD.

Libyan Dinar rates:
1 LYD = 0.71 USD (Libyan Dinar to US Dollar).
1 LYD = 0.64 EUR (Libyan Dinar to Euro).

The Libyan Dinar has token money called Dirham. Interestingly, one Dinar is equal to 1,000 Dirham, and not 100, as we all used to think.

Azerbaijani manat ($0.59)

Currency code – AZN.

Azerbaijani manat rates:
1 AZN = 0.59 USD (Azerbaijani manat to US Dollar).
1 AZN = 0.53 EUR (Azerbaijani manat to Euro).

It was a surprise to see Azerbaijani manat on this list. However, the currency of this Central Asian country is a little bit weaker than the US Dollar.

The economy of Azerbaijan is surprisingly strong, and its unemployment rate is low.

Seborgan Luigino?

Have you ever heard about the currency called Seborgan Luigino?

It belongs to the micronation Principality of Seborga on the border of Italy and France. The Seborgan Luigino circulates mostly locally and is not considered a valid currency in any other country.

But interestingly, the local rate claims to be 1 SPL = 6 USD, which could make it the highest-valued currency in the world if it was officially recognized outside Seborga.

So, despite such a huge value of SPL, it cannot top our list of the highest currencies in the world so far.

Is the high value of the currency a sign of a strong economy?

It is known that the currencies of not very successful countries tend to decrease in value. However, when everything is fine with the economy, we can hardly see the opposite effect.

Indeed, there were almost no cases when the value of a currency was constantly increasing. The reasons may be different. But for a country, the constant strengthening of the currency is not profitable, as the population begins to save funds actively instead of spending them.

Thus, the high value of the currency only says that inflation processes in the country are under control.

In the context of this article, we should also mention Japan being one of the strongest economies in the world. But at the same time, the value of the Japanese yen is very small, $1 = ¥ 108.74.

Information about the highest value of currencies can hardly be used by investors to make any investment decisions. In this case, it is better to consider the most stable currencies.

In addition, we learned that it is not allowed to use banknote images without the “SPECIMEN” title. So follow the law, friends!

Why the US Dollar Is the Global Currency

Photo by Chris McGrath/Getty Images

A global currency is one that is accepted for trade throughout the world. Some of the world’s currencies are accepted for most international transactions. The most popular are the U.S. dollar, the euro, and the yen. Another name for a global currency is the reserve currency.

According to the International Monetary Fund, the U.S. dollar is the most popular.   As of the first quarter of 2020, it makes up 61% of all known central bank foreign exchange reserves. That makes it the de facto global currency, even though it doesn’t hold an official title.

The next closest reserve currency is the euro. It makes up 20% of known central bank foreign currency reserves.   The chance of the euro becoming a world currency was damaged by the eurozone crisis. It revealed the difficulties of a monetary union that’s guided by separate political entities.

The U.S. Dollar Is the Strongest World Currency

The relative strength of the U.S. economy supports the value of the dollar. It’s the reason the dollar is the most powerful currency. Around $580 billion in U.S. bills are used outside the country.   That’s 65% of all dollars. That includes 75% of $100 bills, 55% of $50 bills, and 60%of $20 bills. Most of these bills are in the former Soviet Union countries and in Latin America. They are often used as hard currency in day-to-day transactions.

Cash is just one indication of the role of the dollar as a world currency. More than one-third of the world’s gross domestic product comes from countries that peg their currencies to the dollar. That includes seven countries that have adopted the U.S. dollar as their own. Another 89 countries keep their currency in a tight trading range relative to the dollar.

In the foreign exchange market, the dollar rules. Around 90% of forex trading involves the U.S. dollar. The dollar is just one of the world’s 185 currencies according to the International Standards Organization List, but most of these currencies are only used inside their own countries.   Theoretically, any one of them could replace the dollar as the world’s currency, but they won’t because they aren’t as widely traded. The chart below shows a breakdown of the 10 most traded currencies in 2020.

Almost 40% of the world’s debt is issued in dollars.   As a result, foreign banks need a lot of dollars to conduct business. This became evident during the 2008 financial crisis. Non-American banks had $27 trillion in international liabilities denominated in foreign currencies. Of that, $18 trillion was in U.S. dollars.   As a result, the U.S. Federal Reserve had to increase its dollar swap line. That was the only way to keep the world’s banks from running out of dollars.

The financial crisis made the dollar even more widely used. In 2020, the banks of Japan, Germany, France, and the United Kingdom held more liabilities denominated in dollars than in their own currencies.   Additionally, bank regulations enacted to prevent another crisis have made dollars scarce, and the Federal Reserve has increased the fed funds rate. That decreases the money supply by making dollars more expensive to borrow.

The dollar’s strength is the reason governments are willing to hold the dollar in their foreign exchange reserves. Governments acquire currencies from their international transactions. They also receive them from domestic businesses and travelers who redeem them for local currencies.

Some governments invest their reserves in foreign currencies. China and Japan deliberately buy the currencies of their main export partners. The United States is the largest export partner with both countries. They try to keep their currencies cheaper in comparison so their exports are competitively priced.

Why the Dollar Is the Global Currency

The 1944 Bretton Woods agreement kickstarted the dollar into its current position. Before then, most countries were on the gold standard. Their governments promised to redeem their currencies for their value in gold upon demand. The world’s developed countries met at Bretton Woods, New Hampshire, to peg the exchange rate for all currencies to the U.S. dollar. At that time, the United States held the largest gold reserves. This agreement allowed other countries to back their currencies with dollars rather than gold. 

By the early 1970s, countries began demanding gold for the dollars they held. They needed to combat inflation. Rather than allow Fort Knox to be depleted of all its reserves, President Nixon separated the dollar from gold.   By that time, the dollar had already become the world’s dominant reserve currency. But, unpegging the dollar from its value in gold created stagflation. That’s a combination of inflation and stagnant growth.

Calls for a One World Currency

In March 2009, China and Russia called for a new global currency.   They wanted the world to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.”

China was concerned that the trillions it holds in dollars would be worthless if dollar inflation set in. This could happen as a result of increased U.S. deficit spending and printing of U.S. Treasurys to support U.S. debt. China called for the International Monetary Fund to develop a currency to replace the dollar.

In the fourth quarter of 2020, the Chinese renminbi became another one of the world’s reserve currencies. As of the first quarter of 2020, the world’s central banks held $213 billion worth, according to the IMF. That’s a fraction of the $6.7 trillion held in U.S. dollars but it will continue to grow in the future. China wants its currency to be fully traded on the global foreign exchange markets. It would like the yuan to replace the dollar as the global currency. To do so, China is reforming its economy.

The Bottom Line

Despite trillions of dollars in foreign debt and continuous large deficit spending, the United States still holds global trust and confidence of its ability to pay its obligations. For this reason, the U.S. dollar remains the strongest world currency. It may continue to be the top global currency in the years to come.

The dollar’s current number one status is under contention though. Countries such as China and Russia feel a new one world currency, one not backed by any one nation, is overdue in this increasingly integrated global economy. 

The US dollar is on a tear, and that’s troubling

Even though the novel coronavirus has the United States essentially in lockdown mode, the American dollar continues to be viewed as the world’s safest and most stable currency.

© George Diebold / Getty

The value of the greenback is surging, up more than 7% against a basket of other currencies — such as the euro, British pound and Swiss franc — since hitting the lowest point of 2020 on March 9.

But this strong demand from other countries around the world has created a liquidity crunch — essentially a dollar shortage. There are worries that this could further disrupt global financial markets.

“This collapse in global activity leaves a lot of people with US dollar liabilities to finance, and not enough dollars coming in to do it,” said Kit Juckes, a strategist at Societe Generale, in a report.

“It doesn’t matter that they don’t owe these dollars to Americans. what matters is that they need dollars and need them now,” Juckes added.

That appears to be the main rationale behind moves from the Federal Reserve to roll out new dollar loans (known as swap lines) with five major central banks on Sunday and an expansion of the program with nine other central banks on Thursday.

The Fed announced further plans Friday to step up the frequency of dollar swaps with The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.

The arrangements will now be daily — as opposed to just weekly — starting Monday and will last until at least the end of April.

“Any stress in wholesale funding markets is getting noticed, and anything done to address it matters. Expanding the swap lines to more countries could continue to improve currency funding constraints,” said Lauren Goodwin, economist and multi-asset portfolio strategist at New York Life Investments, in a report.

The resurgent dollar may create another big problem for giant US multinational companies that are already staring to struggle from lower demand abroad as a result of the COVID-19 pandemic.

What happens if the U.S. dollar loses its status as the world’s major reserve currency?

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First off, let’s get rid of one misconception that you seem to share with dozens of other people on Quora. The dollar is not “the world’s reserve currency.” It is “the world’s major reserve currency.” Any currency can be held as a reserve currency. There are no laws about this and it’s up to each country to decide what they want to hold, of course. Nobody declared that each country has to hold the bulk of its foreign exchange reserves in USD, it’s just the result of individual decisions by each country.

As far as we know, the dollar accounts for 63% of reserves, EUR is 20%, and then there ar.

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