Everything You Need to Know About the US Dollar Before Investing
The US dollar is the most widely used fiat currency in the world. It has had its ups and downs, but its value has been on the rise ever since the drop in 2017. This is leading many investors to use the US dollar to increase their wealth and to protect their savings. If you’re thinking about doing either of these things, you should first get acquainted with the biggest global currency.
The US Dollar in All Its Might
Most people are not aware that the US dollar is not just used within the United States. Its widespread use is actually one of the reasons why it is the strongest currency out there. You can find the recognizable green banknotes in eight countries across the globe: The USA, El Salvador, Ecuador, Zimbabwe, Palau, Marshall Islands, Micronesia, and East Timor.
Moreover, around two-thirds of all US dollar banknotes are in circulation outside of the US. This fact only adds to its stability and strength.
In 2018, the American currency did much better than many other large-world denominations. For example, the US dollar increased its value by 38.9% compared to the Turkish Lira, 20.5% compared to the Russian Ruble, 10.9% compared to the Australian Dollar, and 8.5% compared to the Canadian Dollar.
Why Is the US Dollar So Strong Now?
There are several reasons behind the sharp rise in the value of the US dollar. First of all, the US economy is doing really well. For example, in 2018, the minorities in the USA had purchasing power equivalent to $3.9 trillion, which is bigger than Germany’s nominal GDP. Big American-based companies are increasing their profits, which has a positive effect on the currency. As a consequence, investors are rushing to buy dollars, which boosts its value even more.
In addition to that, the Federal Reserve decided to raise the interest rates twice in 2018, thanks to the strong economy. This encourages more investors to side with the Dollar, which has created a positive chain reaction. Unfortunately, financial experts do not foresee another interest rate increase by the end of 2020.