Hi. I need replies to these posts. 1. The only risk I would've seen for the USD
Question:
Hi. I need replies to these posts.
1. The only risk I would've seen for the USD to lose it's international key currency status is the increased tensions between the US and some foreign entities holding major international trade power (China and Russia being the main ones). But when looking at articles on the topic, it seems global crisis doesn't negatively impact the power of USD currency globally. In fact, ''empirical results suggest that for both crisis periods the dependence between oil, gold and the USD exchange rate is stronger compared with the dependence during the untroubled period'' (Bedoui, et al., 2019). This suggests that USD will continue to maintain its key currency status.
2. The U.S. dollar has typically been considered one of the strongest currencies in the world. The U.S. dollar along with the Euro are currencies used in international trade. But the U.S. dollar is preferred for currency trade and investment (Seyoum, 2022). It has remained as a medium for exchange and for investors in the currency. It has provided confidence to the international markets due to its historic stability when compared with other currencies. Other currencies are typically compared and often pegged to the U.S. dollar based on the belief that the currency provides stability and is not susceptible to wide changes and variations in its value and worth. But in order to maintain the U.S. dollar as the global currency, the U.S. has to control its debt, maintain sound economic policies and minimize political acts that can subvert an otherwise reasonable fiscal approach to monetary policies. The U.S. dollar's exchange rate has historically been maintained in the upper echelons when compared to other major currencies. As mentioned by the deputy of the U.S. Treasury Secretary Wally Adeyemo, the U.S. dollar will continue to hold the world's reserve currency (Robertson, 2022). There are numerous factors that support this. The U.S. remains as the most important economy and financial hub, despite the sanctions put on Russia and its attempt along with China to consider controlling the world's convertible currencies. Investors and global traders trust the U.S. legal system, and this supports its strength in the global economy (Robertson, 2022). These facts along with the resilience of the U.S. from an historical perspective create strong framework for the U.S. dollar to be and continue as the key currency for the future.