The US dollar (USD) is the ninth strongest currency in the world, behind the Kuwaiti Dinar, Bahraini Dinar, Oman Rial, Jordan Dinar, British Pound Sterling, Cayman Islands Dollar, Euro, and Swiss Franc. Even though the US dollar is ninth in the world, the US dollar is one of the most powerful currencies as it is deemed as a global currency or some may say a reserve currency. Essentially, you can make dollar payments everywhere (in any country).
More than one-third of the worlds gross domestic product (GDP) derives from countries that pin their currency to the USD. Did you know seven countries adopted the US dollar as their own (Ecuador, El Salvador, Micronesia, Marshall Islands, Palau, Timor-Leste, and Zimbabwe)? In addition, eighty-nine countries keep their currency in close trading range comparative to the dollar. The US dollar is essential in the foreign exchange market, as ninety percent of forex (fx) trading is in USD. The dollar is issued in almost forty percent of the world’s debt, thereby requiring foreign banks to secure a lot of US dollars to conduct business.
There are three factors that affect the US Dollar’s value: supply and demand factors, sentiment and market psychology, and technical factors. When the US exports products or services this creates demand for US dollars, due to customers paying for goods and services in USD. This requires them to convert their local currency into USD. Also, when the government or companies raise capital, foreign investors make those payments in USD. For quite some time, the US dollar has been considered safe when the global economy is uncertain.
Technical factors affect the US dollar is news or events such as payroll data, GDP data, and other economic information that may shed light on the strength or weakness of the economy. The Dollar Index can provide an overview of how the dollar fares against the other currencies in the index. The US dollar index allows foreign currency traders to monitor the value USD relative to six currencies (Euro, Swiss Franc, Japanese Yen, Canadian Dollar, British Pound, and Swedish Krona) in a single transaction. It’s pretty much a betting game against any risks with respect to the dollar.
What does this mean to me and my travel life? This means the US dollar has a higher value than many countries around the world. As such, products and services tend to cost less due to the fx rate between USD and the country you’re visiting. For example, see the below conversion chart:
|Argentina: 42.52 ARS to $1 USD||South Africa: 13.96 ZAR to $1 USD|
|Egypt: 16.62 EGP to $1 USD||Brazil: 3.76 BRL to $1 USD|
|Mexico: 19.01 MXN to $1 USD||Hungary: 290.68 HUF to $1 USD|
|Vietnam: 23,169 VND to $1 USD||New Zealand: 1.48 NZD to $1 USD|
|Sri Lanka: 175.68 LKR to $1 USD||Canada: 1.30 CAD to $1 USD|
|Costa Rica: 573.89 CRC to $1 USD||China: 6.87 CNY to $1 USD|
|Morocco: 9.55 MAD to $1 USD||Dubai: 3.67 UAE to $1 USD|
|Kenya: 102.97 KES to $1 USD||Thailand: 30.88 THB to $1 USD|
As you can see, the exchange rates make a difference when vacationing in locations where the local currency is weaker than the US dollar. These locations are beautiful locations and can provide affordable options during your stay. Just remember when you plan for your trip to consider the forex rate of the country.
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