United States dollar

International use

A few nations besides the United States use the U.S. dollar (USD) as their official currency. Ecuador, El Salvador, and East Timor all adopted the currency independently. The former members of the US-administered Trust Territory of the Pacific Islands, including Palau, the Federated States of Micronesia and the Marshall Islands, chose not to issue their own currency after becoming independent.

Related Topics:
Ecuador - El Salvador - East Timor - Trust Territory of the Pacific Islands - Palau - Federated States of Micronesia - Marshall Islands

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Additionally, the local currencies of Bermuda, the Bahamas, Panama, and a few other states can be freely exchanged at a 1:1 ratio for USD. The currency of Barbados is similarly convertible at a 2:1 ratio. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used interchangeably with local currency as a de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since the early 1983 at HK$7.8/USD, and Pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the US dollar roughly at MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia and Kuwait, also peg their currencies to the dollar, since the dollar is the currency used in the international oil trade.

Related Topics:
Bermuda - The Bahamas - Panama - Barbados - Argentina - Exchange rate - Peso - 1991 - 2002 - Lebanon - Lebanese pound - De facto - Hong Kong dollar - Link - 1983 - Pataca - Macau - Saudi Arabia - Kuwait

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The renminbi used by the People's Republic of China had been informally and controversially pegged to the dollar since the mid-1990s at Y8.28/USD until July 21, 2005. Likewise, Malaysia had pegged its ringgit at RM3.8/USD since 1997. However, on July 21, 2005, both countries removed their respective pegs and adopted managed floats against a basket of currencies.

Related Topics:
Renminbi - People's Republic of China - 1990s - Malaysia - Ringgit - 1997

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The dollar is also used as the standard unit of currency in international markets for commodities such as gold and oil. Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by US companies.

Related Topics:
Gold - Oil - Airbus

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At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States.

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According to economist Paul Samuelson, the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust.

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Not long after the introduction of the euro (€; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to steadily depreciate in value on the international scene. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially its rival the euro. The euro rose above $1.36 /€ (under 0.74 €/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 (rate of $0.87/€). Beginning in late May into early June though the Dollar rose sharply against the Euro as European states reported stagnation in the overall EU economy and doubts were raised over the EU Constitution which was voted down in two member states: France and The Netherlands. As unemployment rates rise in the Euro zone and economic growth slows the EU may see a drop in the value of the Euro against the Dollar for at least part of 2005 although the Euro is expected to maintain its strength if not in a slightly diminished manner.

Related Topics:
Euro

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