Currency Exchange Rates

Us Currency Exchange

US Currency Exchange - The World's Reserve Currency

Us Currency Exchange

The US currency exchange has traditionally enjoyed the role as the worlds 'reserve' currency due to its wide role and use. Many countries conduct their foreign currency trade in US dollars due to its wide acceptance as a universally recognized currency. It is also used as a benchmark for other foreign currency valuations and for countries that use a trade weighted basket of currencies, the US dollar usually comprises a major presence.

The value of the US currency exchange is affected by the economic and business factors. Interest rate differentials and the demand and supply for US dollars influence its value. The US currency also enjoys a built in structural influence that supports its international strength. The price of oil is denominated in US foreign exchange which has helped to keep the demand for US dollars artificially high. In the past this has contributed to US economic might. A strong US dollar means the cost of imports or services derived from foreign countries provides a competitive advantage to US companies. In recent times, this advantage is starting to diminish.

Us Currency Exchange

Since the introduction of the Euro, the US currency exchange rate has come under increasing pressure. Many oil producing countries have been investigating alternative ways to price oil transactions. The Euro is gaining an increasing prominence on the worldwide economic stage. Foreign countries such as China, Japan and some Middle Eastern countries have also found they are carrying a disproportionate amount of US denominated foreign currency reserves. This has prompted a diversification out of the US dollar. As a consequence, the US money exchange has been in a gradual decent.

The market turmoil of recent times has also brought pressure on the US currency exchange rate. The US current account deficit requires foreign capital inflows as a source of financing. The sub prime mess of 2007 has prompted a cutting in official interest rates as means to stimulate further stock market investment and to encourage borrowing. This reduction in rates has resulted in the US dollar further free falling in response to adverse fundamentals.

The demand for Euro's has prompted it to rise quite considerably against the US dollar, the pound sterling, the Canadian dollar and Australian dollar. The buoyant demand for commodities from developing economies such as China and India has contributed to the strong demand for the commodity based currencies of Australia and Canada. The US/Canada currency exchange rate recently hit parity and the Australian dollar is heading in the same direction. It will take some major economic adjustments on a worldwide scale for the US currency exchange rate, relative to other international currencies, to return to its former glory.

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