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America is the world's biggest economy, due to which it lends many poorer countries in the US dollar and receives the repayment in the same currency that is why the demand of dollar in the international market exists throughout the year.Īccording to a report from the European Union, in the year 2016, the world share of the United States in export was around 14% of the world's total exports while in the import US share was around 18 percent.Ĩ. The value of US dollar don’t fluctuate often that is the reason every country of the world accept dollar without any hesitation.ħ. If two Non-American countries also trade with each other, they prefer to take US dollars in payment because they know that if they have dollars in their hands, they can import goods from any other country any time.Ħ. Foreign Exchange Reserves in central banks around the world account for 64% of the US dollar.ĥ. Currently there are 189 members in the IMF and as per the rule of the IMF every member country has to deposit certain percentage of their quota in the US dollars, which ultimately increases the demand of the dollar internationally.Ĥ. Incidentally, because of its stability, the German mark was also considered the reserve currency for the intra-European economy before the introduction of the euro.3. In Southeast and Far Asia, the Japanese Yen is of enormous importance, but is slowly losing its significance due to its original circulation and is ceding its role to the Chinese Renminbi. Although it still has a share of "only" 16% in terms of international use, it is gaining acceptance in more and more economies and also exhibits greater stability.ĭepending on the interpretation of the term reserve currency, other currencies are also regarded as such: The British pound has traditionally played a strong role in the countries of the British Commonwealth. Since 2002, the Euro has also increasingly been seen as a reserve currency. The dollar has enormous influence, accounting for 63% of global foreign exchange reserves (end of 2017). dollar has been considered a reserve currency since World War II because, for example, oil prices are always calculated in dollars and numerous other currencies have pegged themselves to the U.S.
Lead currencies A reserve currency is a currency that is also used to a particular extent as a means of payment beyond its country of origin.
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